Correlation Between Artesian Resources and Beijing Enterprises
Can any of the company-specific risk be diversified away by investing in both Artesian Resources and Beijing Enterprises 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 Artesian Resources and Beijing Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artesian Resources and Beijing Enterprises Water, you can compare the effects of market volatilities on Artesian Resources and Beijing Enterprises 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 Artesian Resources with a short position of Beijing Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artesian Resources and Beijing Enterprises.
Diversification Opportunities for Artesian Resources and Beijing Enterprises
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Artesian and Beijing is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Artesian Resources and Beijing Enterprises Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enterprises Water and Artesian Resources 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 Artesian Resources are associated (or correlated) with Beijing Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enterprises Water has no effect on the direction of Artesian Resources i.e., Artesian Resources and Beijing Enterprises go up and down completely randomly.
Pair Corralation between Artesian Resources and Beijing Enterprises
Assuming the 90 days horizon Artesian Resources is expected to under-perform the Beijing Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, Artesian Resources is 2.66 times less risky than Beijing Enterprises. The stock trades about -0.05 of its potential returns per unit of risk. The Beijing Enterprises Water is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Beijing Enterprises Water on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Beijing Enterprises Water or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 52.03% |
| Values | Daily Returns |
Artesian Resources vs. Beijing Enterprises Water
Performance |
| Timeline |
| Artesian Resources |
| Beijing Enterprises Water |
Artesian Resources and Beijing Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artesian Resources and Beijing Enterprises
The main advantage of trading using opposite Artesian Resources and Beijing Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artesian Resources position performs unexpectedly, Beijing Enterprises 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 Enterprises will offset losses from the drop in Beijing Enterprises' long position.| Artesian Resources vs. California Water Service | Artesian Resources vs. SJW Group Common | Artesian Resources vs. The York Water | Artesian Resources vs. American States Water |
| Beijing Enterprises vs. Artesian Resources | Beijing Enterprises vs. Global Water Resources | Beijing Enterprises vs. Essential Utilities | Beijing Enterprises vs. American Water Works |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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