Correlation Between Beijing Wandong and Blue Sail
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By analyzing existing cross correlation between Beijing Wandong Medical and Blue Sail Medical, you can compare the effects of market volatilities on Beijing Wandong and Blue Sail 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 Beijing Wandong with a short position of Blue Sail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Wandong and Blue Sail.
Diversification Opportunities for Beijing Wandong and Blue Sail
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Beijing and Blue is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Wandong Medical and Blue Sail Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sail Medical and Beijing Wandong 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 Beijing Wandong Medical are associated (or correlated) with Blue Sail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sail Medical has no effect on the direction of Beijing Wandong i.e., Beijing Wandong and Blue Sail go up and down completely randomly.
Pair Corralation between Beijing Wandong and Blue Sail
Assuming the 90 days trading horizon Beijing Wandong Medical is expected to generate 1.42 times more return on investment than Blue Sail. However, Beijing Wandong is 1.42 times more volatile than Blue Sail Medical. It trades about 0.27 of its potential returns per unit of risk. Blue Sail Medical is currently generating about 0.04 per unit of risk. If you would invest 1,392 in Beijing Wandong Medical on August 25, 2024 and sell it today you would earn a total of 280.00 from holding Beijing Wandong Medical or generate 20.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Beijing Wandong Medical vs. Blue Sail Medical
Performance |
Timeline |
Beijing Wandong Medical |
Blue Sail Medical |
Beijing Wandong and Blue Sail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beijing Wandong and Blue Sail
The main advantage of trading using opposite Beijing Wandong and Blue Sail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Wandong position performs unexpectedly, Blue Sail 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 Blue Sail will offset losses from the drop in Blue Sail's long position.Beijing Wandong vs. Bank of China | Beijing Wandong vs. Kweichow Moutai Co | Beijing Wandong vs. PetroChina Co Ltd | Beijing Wandong vs. Bank of Communications |
Blue Sail vs. Bank of China | Blue Sail vs. Kweichow Moutai Co | Blue Sail vs. PetroChina Co Ltd | Blue Sail vs. Bank of Communications |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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