Correlation Between Beijing MediaLimited and Sto SE
Can any of the company-specific risk be diversified away by investing in both Beijing MediaLimited and Sto SE 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 Sto SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Sto SE Co, you can compare the effects of market volatilities on Beijing MediaLimited and Sto SE 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 Sto SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing MediaLimited and Sto SE.
Diversification Opportunities for Beijing MediaLimited and Sto SE
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beijing and Sto is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Sto SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sto SE 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 Sto SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sto SE has no effect on the direction of Beijing MediaLimited i.e., Beijing MediaLimited and Sto SE go up and down completely randomly.
Pair Corralation between Beijing MediaLimited and Sto SE
Assuming the 90 days horizon Beijing Media is expected to generate 3.0 times more return on investment than Sto SE. However, Beijing MediaLimited is 3.0 times more volatile than Sto SE Co. It trades about 0.01 of its potential returns per unit of risk. Sto SE Co is currently generating about -0.02 per unit of risk. If you would invest 5.80 in Beijing Media on September 2, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Sto SE Co
Performance |
| Timeline |
| Beijing MediaLimited |
| Sto SE |
Beijing MediaLimited and Sto SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing MediaLimited and Sto SE
The main advantage of trading using opposite Beijing MediaLimited and Sto SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing MediaLimited position performs unexpectedly, Sto SE 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 Sto SE will offset losses from the drop in Sto SE's long position.| Beijing MediaLimited vs. Haverty Furniture Companies | Beijing MediaLimited vs. MI Homes | Beijing MediaLimited vs. Addus HomeCare | Beijing MediaLimited vs. MHP Hotel AG |
| Sto SE vs. HK Electric Investments | Sto SE vs. GAMESTOP | Sto SE vs. TSOGO SUN GAMING | Sto SE vs. Virtus Investment Partners |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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