Correlation Between Fujian Oriental and Beijing Baolande
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By analyzing existing cross correlation between Fujian Oriental Silver and Beijing Baolande Software, you can compare the effects of market volatilities on Fujian Oriental and Beijing Baolande 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 Fujian Oriental with a short position of Beijing Baolande. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and Beijing Baolande.
Diversification Opportunities for Fujian Oriental and Beijing Baolande
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fujian and Beijing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Beijing Baolande Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Baolande Software and Fujian Oriental 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 Fujian Oriental Silver are associated (or correlated) with Beijing Baolande. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Baolande Software has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Beijing Baolande go up and down completely randomly.
Pair Corralation between Fujian Oriental and Beijing Baolande
Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Beijing Baolande. But the stock apears to be less risky and, when comparing its historical volatility, Fujian Oriental Silver is 1.11 times less risky than Beijing Baolande. The stock trades about -0.15 of its potential returns per unit of risk. The Beijing Baolande Software is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,723 in Beijing Baolande Software on November 7, 2024 and sell it today you would lose (1,011) from holding Beijing Baolande Software or give up 27.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Oriental Silver vs. Beijing Baolande Software
Performance |
| Timeline |
| Fujian Oriental Silver |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Beijing Baolande Software |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fujian Oriental and Beijing Baolande Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Oriental and Beijing Baolande
The main advantage of trading using opposite Fujian Oriental and Beijing Baolande positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, Beijing Baolande 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 Beijing Baolande will offset losses from the drop in Beijing Baolande's long position.The idea behind Fujian Oriental Silver and Beijing Baolande Software 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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