Correlation Between BCEG Environmental and Xinjiang Communications
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By analyzing existing cross correlation between BCEG Environmental Remediation and Xinjiang Communications Construction, you can compare the effects of market volatilities on BCEG Environmental and Xinjiang Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BCEG Environmental with a short position of Xinjiang Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCEG Environmental and Xinjiang Communications.
Diversification Opportunities for BCEG Environmental and Xinjiang Communications
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BCEG and Xinjiang is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BCEG Environmental Remediation and Xinjiang Communications Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Communications and BCEG Environmental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BCEG Environmental Remediation are associated (or correlated) with Xinjiang Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Communications has no effect on the direction of BCEG Environmental i.e., BCEG Environmental and Xinjiang Communications go up and down completely randomly.
Pair Corralation between BCEG Environmental and Xinjiang Communications
Assuming the 90 days trading horizon BCEG Environmental is expected to generate 1.0 times less return on investment than Xinjiang Communications. But when comparing it to its historical volatility, BCEG Environmental Remediation is 1.12 times less risky than Xinjiang Communications. It trades about 0.06 of its potential returns per unit of risk. Xinjiang Communications Construction is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,085 in Xinjiang Communications Construction on September 3, 2024 and sell it today you would earn a total of 195.00 from holding Xinjiang Communications Construction or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCEG Environmental Remediation vs. Xinjiang Communications Constr
Performance |
| Timeline |
| BCEG Environmental |
| Xinjiang Communications |
BCEG Environmental and Xinjiang Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCEG Environmental and Xinjiang Communications
The main advantage of trading using opposite BCEG Environmental and Xinjiang Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCEG Environmental position performs unexpectedly, Xinjiang Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xinjiang Communications will offset losses from the drop in Xinjiang Communications' long position.The idea behind BCEG Environmental Remediation and Xinjiang Communications Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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