Correlation Between Beijing Gas and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both Beijing Gas and OPAL Fuels 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 Beijing Gas and OPAL Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Gas Blue and OPAL Fuels, you can compare the effects of market volatilities on Beijing Gas and OPAL Fuels 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 Gas with a short position of OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Gas and OPAL Fuels.
Diversification Opportunities for Beijing Gas and OPAL Fuels
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and OPAL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Gas Blue and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels and Beijing Gas 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 Gas Blue are associated (or correlated) with OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of Beijing Gas i.e., Beijing Gas and OPAL Fuels go up and down completely randomly.
Pair Corralation between Beijing Gas and OPAL Fuels
Assuming the 90 days horizon Beijing Gas Blue is expected to generate 22.85 times more return on investment than OPAL Fuels. However, Beijing Gas is 22.85 times more volatile than OPAL Fuels. It trades about 0.06 of its potential returns per unit of risk. OPAL Fuels is currently generating about -0.06 per unit of risk. If you would invest 3.87 in Beijing Gas Blue on August 31, 2024 and sell it today you would lose (3.46) from holding Beijing Gas Blue or give up 89.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Beijing Gas Blue vs. OPAL Fuels
Performance |
| Timeline |
| Beijing Gas Blue |
| OPAL Fuels |
Beijing Gas and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Gas and OPAL Fuels
The main advantage of trading using opposite Beijing Gas and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Gas position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey Resources |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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