Correlation Between Avanos Medical and Beijing Media
Can any of the company-specific risk be diversified away by investing in both Avanos Medical and Beijing Media at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Avanos Medical and Beijing Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and Beijing Media, you can compare the effects of market volatilities on Avanos Medical and Beijing Media 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 Avanos Medical with a short position of Beijing Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and Beijing Media.
Diversification Opportunities for Avanos Medical and Beijing Media
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avanos and Beijing is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Media and Avanos Medical 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 Avanos Medical are associated (or correlated) with Beijing Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Media has no effect on the direction of Avanos Medical i.e., Avanos Medical and Beijing Media go up and down completely randomly.
Pair Corralation between Avanos Medical and Beijing Media
Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Beijing Media. But the stock apears to be less risky and, when comparing its historical volatility, Avanos Medical is 1.25 times less risky than Beijing Media. The stock trades about -0.08 of its potential returns per unit of risk. The Beijing Media is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3.35 in Beijing Media on September 3, 2024 and sell it today you would lose (0.15) from holding Beijing Media or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. Beijing Media
Performance |
| Timeline |
| Avanos Medical |
| Beijing Media |
Avanos Medical and Beijing Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and Beijing Media
The main advantage of trading using opposite Avanos Medical and Beijing Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical position performs unexpectedly, Beijing Media 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 Media will offset losses from the drop in Beijing Media's long position.| Avanos Medical vs. Lifeway Foods | Avanos Medical vs. DEVRY EDUCATION GRP | Avanos Medical vs. CAL MAINE FOODS | Avanos Medical vs. Xinhua Winshare Publishing |
| Beijing Media vs. MEDICAL FACILITIES NEW | Beijing Media vs. Avanos Medical | Beijing Media vs. Diamyd Medical AB | Beijing Media vs. FARO Technologies |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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