Correlation Between Shaanxi Broadcast and Beijing Wantai
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By analyzing existing cross correlation between Shaanxi Broadcast TV and Beijing Wantai Biological, you can compare the effects of market volatilities on Shaanxi Broadcast and Beijing Wantai 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 Shaanxi Broadcast with a short position of Beijing Wantai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Beijing Wantai.
Diversification Opportunities for Shaanxi Broadcast and Beijing Wantai
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shaanxi and Beijing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Beijing Wantai Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wantai Biological and Shaanxi Broadcast 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 Shaanxi Broadcast TV are associated (or correlated) with Beijing Wantai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wantai Biological has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Beijing Wantai go up and down completely randomly.
Pair Corralation between Shaanxi Broadcast and Beijing Wantai
Assuming the 90 days trading horizon Shaanxi Broadcast TV is expected to under-perform the Beijing Wantai. In addition to that, Shaanxi Broadcast is 1.46 times more volatile than Beijing Wantai Biological. It trades about -0.08 of its total potential returns per unit of risk. Beijing Wantai Biological is currently generating about -0.01 per unit of volatility. If you would invest 7,416 in Beijing Wantai Biological on November 7, 2024 and sell it today you would lose (607.00) from holding Beijing Wantai Biological or give up 8.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaanxi Broadcast TV vs. Beijing Wantai Biological
Performance |
| Timeline |
| Shaanxi Broadcast |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Beijing Wantai Biological |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shaanxi Broadcast and Beijing Wantai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Broadcast and Beijing Wantai
The main advantage of trading using opposite Shaanxi Broadcast and Beijing Wantai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Broadcast position performs unexpectedly, Beijing Wantai 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 Wantai will offset losses from the drop in Beijing Wantai's long position.The idea behind Shaanxi Broadcast TV and Beijing Wantai Biological 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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