Correlation Between Aluminumof China and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and BJs Restaurants 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 Aluminumof China and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and BJs Restaurants, you can compare the effects of market volatilities on Aluminumof China and BJs Restaurants 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 Aluminumof China with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and BJs Restaurants.
Diversification Opportunities for Aluminumof China and BJs Restaurants
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aluminumof and BJs is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Aluminumof China 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 Aluminum of are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Aluminumof China i.e., Aluminumof China and BJs Restaurants go up and down completely randomly.
Pair Corralation between Aluminumof China and BJs Restaurants
Assuming the 90 days horizon Aluminum of is expected to generate 1.94 times more return on investment than BJs Restaurants. However, Aluminumof China is 1.94 times more volatile than BJs Restaurants. It trades about 0.06 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.01 per unit of risk. If you would invest 43.00 in Aluminum of on November 8, 2024 and sell it today you would earn a total of 22.00 from holding Aluminum of or generate 51.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.26% |
| Values | Daily Returns |
Aluminum of vs. BJs Restaurants
Performance |
| Timeline |
| Aluminumof China |
| BJs Restaurants |
Aluminumof China and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and BJs Restaurants
The main advantage of trading using opposite Aluminumof China and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Aluminumof China vs. Air China Limited | Aluminumof China vs. COSCO SHIPPING Holdings | Aluminumof China vs. Zijin Mining Group | Aluminumof China vs. Bank of China |
| BJs Restaurants vs. Dominos Pizza Common | BJs Restaurants vs. Yum Brands | BJs Restaurants vs. The Wendys Co | BJs Restaurants vs. Wingstop |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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