Correlation Between Beijing YanDong and Offshore Oil
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By analyzing existing cross correlation between Beijing YanDong MicroElectronic and Offshore Oil Engineering, you can compare the effects of market volatilities on Beijing YanDong and Offshore Oil 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 YanDong with a short position of Offshore Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing YanDong and Offshore Oil.
Diversification Opportunities for Beijing YanDong and Offshore Oil
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beijing and Offshore is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beijing YanDong MicroElectroni and Offshore Oil Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offshore Oil Engineering and Beijing YanDong 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 YanDong MicroElectronic are associated (or correlated) with Offshore Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offshore Oil Engineering has no effect on the direction of Beijing YanDong i.e., Beijing YanDong and Offshore Oil go up and down completely randomly.
Pair Corralation between Beijing YanDong and Offshore Oil
Assuming the 90 days trading horizon Beijing YanDong MicroElectronic is expected to generate 1.54 times more return on investment than Offshore Oil. However, Beijing YanDong is 1.54 times more volatile than Offshore Oil Engineering. It trades about 0.01 of its potential returns per unit of risk. Offshore Oil Engineering is currently generating about -0.01 per unit of risk. If you would invest 2,197 in Beijing YanDong MicroElectronic on November 7, 2024 and sell it today you would lose (294.00) from holding Beijing YanDong MicroElectronic or give up 13.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing YanDong MicroElectroni vs. Offshore Oil Engineering
Performance |
| Timeline |
| Beijing YanDong Micr |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Offshore Oil Engineering |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Beijing YanDong and Offshore Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing YanDong and Offshore Oil
The main advantage of trading using opposite Beijing YanDong and Offshore Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing YanDong position performs unexpectedly, Offshore Oil 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 Offshore Oil will offset losses from the drop in Offshore Oil's long position.The idea behind Beijing YanDong MicroElectronic and Offshore Oil Engineering 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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