Correlation Between COSTCO WHOLESALE and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Beijing MediaLimited 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 COSTCO WHOLESALE and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and Beijing Media, you can compare the effects of market volatilities on COSTCO WHOLESALE and Beijing MediaLimited 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 COSTCO WHOLESALE with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Beijing MediaLimited.
Diversification Opportunities for COSTCO WHOLESALE and Beijing MediaLimited
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between COSTCO and Beijing is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with Beijing MediaLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing MediaLimited has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Beijing MediaLimited
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.27 times more return on investment than Beijing MediaLimited. However, COSTCO WHOLESALE CDR is 3.76 times less risky than Beijing MediaLimited. It trades about 0.09 of its potential returns per unit of risk. Beijing Media is currently generating about 0.01 per unit of risk. If you would invest 1,501 in COSTCO WHOLESALE CDR on September 2, 2024 and sell it today you would earn a total of 1,459 from holding COSTCO WHOLESALE CDR or generate 97.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Beijing Media
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Beijing MediaLimited |
COSTCO WHOLESALE and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Beijing MediaLimited
The main advantage of trading using opposite COSTCO WHOLESALE and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Beijing MediaLimited 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 Beijing MediaLimited will offset losses from the drop in Beijing MediaLimited's long position.| COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech | COSTCO WHOLESALE vs. SIVERS SEMICONDUCTORS AB |
| Beijing MediaLimited vs. Haverty Furniture Companies | Beijing MediaLimited vs. MI Homes | Beijing MediaLimited vs. Addus HomeCare | Beijing MediaLimited vs. MHP Hotel AG |
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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