Correlation Between Aena SME and Beijing Capital
Can any of the company-specific risk be diversified away by investing in both Aena SME and Beijing Capital 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 Aena SME and Beijing Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SME SA and Beijing Capital International, you can compare the effects of market volatilities on Aena SME and Beijing Capital 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 Aena SME with a short position of Beijing Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SME and Beijing Capital.
Diversification Opportunities for Aena SME and Beijing Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aena and Beijing is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and Beijing Capital International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Capital Inte and Aena SME 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 Aena SME SA are associated (or correlated) with Beijing Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Capital Inte has no effect on the direction of Aena SME i.e., Aena SME and Beijing Capital go up and down completely randomly.
Pair Corralation between Aena SME and Beijing Capital
Assuming the 90 days horizon Aena SME SA is expected to under-perform the Beijing Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aena SME SA is 5.13 times less risky than Beijing Capital. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Beijing Capital International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Beijing Capital International on September 1, 2024 and sell it today you would lose (2.00) from holding Beijing Capital International or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SME SA vs. Beijing Capital International
Performance |
| Timeline |
| Aena SME SA |
| Beijing Capital Inte |
Aena SME and Beijing Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SME and Beijing Capital
The main advantage of trading using opposite Aena SME and Beijing Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SME position performs unexpectedly, Beijing Capital 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 Capital will offset losses from the drop in Beijing Capital's long position.| Aena SME vs. UDR Inc | Aena SME vs. FactSet Research Systems | Aena SME vs. Netflix | Aena SME vs. Scottie Resources Corp |
| Beijing Capital vs. UDR Inc | Beijing Capital vs. FactSet Research Systems | Beijing Capital vs. Netflix | Beijing Capital vs. Scottie Resources Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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