Correlation Between Beijing Media and UNIVMUSIC GRPADR/050
Can any of the company-specific risk be diversified away by investing in both Beijing Media and UNIVMUSIC GRPADR/050 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 Media and UNIVMUSIC GRPADR/050 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on Beijing Media and UNIVMUSIC GRPADR/050 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 Media with a short position of UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Media and UNIVMUSIC GRPADR/050.
Diversification Opportunities for Beijing Media and UNIVMUSIC GRPADR/050
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Beijing and UNIVMUSIC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 and Beijing Media 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 Media are associated (or correlated) with UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of Beijing Media i.e., Beijing Media and UNIVMUSIC GRPADR/050 go up and down completely randomly.
Pair Corralation between Beijing Media and UNIVMUSIC GRPADR/050
Assuming the 90 days horizon Beijing Media is expected to generate 3.22 times more return on investment than UNIVMUSIC GRPADR/050. However, Beijing Media is 3.22 times more volatile than UNIVMUSIC GRPADR050. It trades about 0.01 of its potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.02 per unit of risk. If you would invest 5.80 in Beijing Media on September 3, 2024 and sell it today you would lose (2.60) from holding Beijing Media or give up 44.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. UNIVMUSIC GRPADR050
Performance |
| Timeline |
| Beijing Media |
| UNIVMUSIC GRPADR/050 |
Beijing Media and UNIVMUSIC GRPADR/050 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Media and UNIVMUSIC GRPADR/050
The main advantage of trading using opposite Beijing Media and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Media position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050's long position.| Beijing Media vs. MEDICAL FACILITIES NEW | Beijing Media vs. Avanos Medical | Beijing Media vs. Diamyd Medical AB | Beijing Media vs. FARO Technologies |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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