Correlation Between Beijing MediaLimited and Healthcare Services
Can any of the company-specific risk be diversified away by investing in both Beijing MediaLimited and Healthcare Services 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 Healthcare Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Healthcare Services Group, you can compare the effects of market volatilities on Beijing MediaLimited and Healthcare Services 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 Healthcare Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing MediaLimited and Healthcare Services.
Diversification Opportunities for Beijing MediaLimited and Healthcare Services
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beijing and Healthcare is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Healthcare Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Services 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 Healthcare Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Services has no effect on the direction of Beijing MediaLimited i.e., Beijing MediaLimited and Healthcare Services go up and down completely randomly.
Pair Corralation between Beijing MediaLimited and Healthcare Services
Assuming the 90 days horizon Beijing Media is expected to under-perform the Healthcare Services. In addition to that, Beijing MediaLimited is 1.66 times more volatile than Healthcare Services Group. It trades about -0.18 of its total potential returns per unit of risk. Healthcare Services Group is currently generating about 0.3 per unit of volatility. If you would invest 1,000.00 in Healthcare Services Group on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Healthcare Services Group or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Healthcare Services Group
Performance |
| Timeline |
| Beijing MediaLimited |
| Healthcare Services |
Beijing MediaLimited and Healthcare Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing MediaLimited and Healthcare Services
The main advantage of trading using opposite Beijing MediaLimited and Healthcare Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing MediaLimited position performs unexpectedly, Healthcare Services 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 Healthcare Services will offset losses from the drop in Healthcare Services' 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 |
| Healthcare Services vs. Corporate Travel Management | Healthcare Services vs. AGF Management Limited | Healthcare Services vs. Ramsay Health Care | Healthcare Services vs. Natural Health Trends |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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