Correlation Between Beijing MediaLimited and Natural Health
Can any of the company-specific risk be diversified away by investing in both Beijing MediaLimited and Natural Health 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 Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Natural Health Trends, you can compare the effects of market volatilities on Beijing MediaLimited and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing MediaLimited and Natural Health.
Diversification Opportunities for Beijing MediaLimited and Natural Health
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beijing and Natural is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Beijing MediaLimited i.e., Beijing MediaLimited and Natural Health go up and down completely randomly.
Pair Corralation between Beijing MediaLimited and Natural Health
Assuming the 90 days horizon Beijing Media is expected to generate 2.64 times more return on investment than Natural Health. However, Beijing MediaLimited is 2.64 times more volatile than Natural Health Trends. It trades about 0.02 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.04 per unit of risk. If you would invest 4.80 in Beijing Media on August 31, 2024 and sell it today you would lose (1.25) from holding Beijing Media or give up 26.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Natural Health Trends
Performance |
| Timeline |
| Beijing MediaLimited |
| Natural Health Trends |
Beijing MediaLimited and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing MediaLimited and Natural Health
The main advantage of trading using opposite Beijing MediaLimited and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing MediaLimited position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| Beijing MediaLimited vs. NISSAN CHEMICAL IND | Beijing MediaLimited vs. Seven West Media | Beijing MediaLimited vs. Tencent Music Entertainment | Beijing MediaLimited vs. KINGBOARD CHEMICAL |
| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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