Correlation Between Beijing MediaLimited and Data#3
Can any of the company-specific risk be diversified away by investing in both Beijing MediaLimited and Data#3 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 MediaLimited and Data#3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Data3 Limited, you can compare the effects of market volatilities on Beijing MediaLimited and Data#3 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 MediaLimited with a short position of Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing MediaLimited and Data#3.
Diversification Opportunities for Beijing MediaLimited and Data#3
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beijing and Data#3 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited and Beijing MediaLimited 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 Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of Beijing MediaLimited i.e., Beijing MediaLimited and Data#3 go up and down completely randomly.
Pair Corralation between Beijing MediaLimited and Data#3
Assuming the 90 days horizon Beijing Media is expected to generate 2.48 times more return on investment than Data#3. However, Beijing MediaLimited is 2.48 times more volatile than Data3 Limited. It trades about 0.01 of its potential returns per unit of risk. Data3 Limited is currently generating about 0.02 per unit of risk. If you would invest 5.20 in Beijing Media on September 1, 2024 and sell it today you would lose (2.00) from holding Beijing Media or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Data3 Limited
Performance |
| Timeline |
| Beijing MediaLimited |
| Data3 Limited |
Beijing MediaLimited and Data#3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing MediaLimited and Data#3
The main advantage of trading using opposite Beijing MediaLimited and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing MediaLimited position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.| Beijing MediaLimited vs. Publicis Groupe SA | Beijing MediaLimited vs. WPP PLC ADR | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings |
| Data#3 vs. FUJITSU LTD ADR | Data#3 vs. Superior Plus Corp | Data#3 vs. NMI Holdings | Data#3 vs. Origin Agritech |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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