Correlation Between Beijing Gas and ENN Energy
Can any of the company-specific risk be diversified away by investing in both Beijing Gas and ENN Energy 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 ENN Energy 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 ENN Energy Holdings, you can compare the effects of market volatilities on Beijing Gas and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Gas and ENN Energy.
Diversification Opportunities for Beijing Gas and ENN Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Beijing and ENN is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Gas Blue and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Beijing Gas i.e., Beijing Gas and ENN Energy go up and down completely randomly.
Pair Corralation between Beijing Gas and ENN Energy
Assuming the 90 days horizon Beijing Gas Blue is expected to generate 10.49 times more return on investment than ENN Energy. However, Beijing Gas is 10.49 times more volatile than ENN Energy Holdings. It trades about 0.06 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.03 per unit of risk. If you would invest 1.90 in Beijing Gas Blue on August 31, 2024 and sell it today you would lose (1.49) from holding Beijing Gas Blue or give up 78.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.75% |
| Values | Daily Returns |
Beijing Gas Blue vs. ENN Energy Holdings
Performance |
| Timeline |
| Beijing Gas Blue |
| ENN Energy Holdings |
Beijing Gas and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Gas and ENN Energy
The main advantage of trading using opposite Beijing Gas and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Gas position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
| ENN Energy vs. Atmos Energy | ENN Energy vs. LCI Industries | ENN Energy vs. Golden Agri Resources | ENN Energy vs. Empire State Realty |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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