Correlation Between Beijing Media and Pure Storage
Can any of the company-specific risk be diversified away by investing in both Beijing Media and Pure Storage 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 Pure Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Pure Storage, you can compare the effects of market volatilities on Beijing Media and Pure Storage 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 Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Media and Pure Storage.
Diversification Opportunities for Beijing Media and Pure Storage
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beijing and Pure is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage 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 Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Beijing Media i.e., Beijing Media and Pure Storage go up and down completely randomly.
Pair Corralation between Beijing Media and Pure Storage
Assuming the 90 days horizon Beijing Media is expected to generate 1.65 times less return on investment than Pure Storage. But when comparing it to its historical volatility, Beijing Media is 1.02 times less risky than Pure Storage. It trades about 0.03 of its potential returns per unit of risk. Pure Storage is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,998 in Pure Storage on August 30, 2024 and sell it today you would earn a total of 154.00 from holding Pure Storage or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Pure Storage
Performance |
| Timeline |
| Beijing Media |
| Pure Storage |
Beijing Media and Pure Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Media and Pure Storage
The main advantage of trading using opposite Beijing Media and Pure Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Media position performs unexpectedly, Pure Storage 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 Pure Storage will offset losses from the drop in Pure Storage's long position.| Beijing Media vs. Superior Plus Corp | Beijing Media vs. SIVERS SEMICONDUCTORS AB | Beijing Media vs. Talanx AG | Beijing Media vs. 2G ENERGY |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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