Correlation Between PARKEN Sport and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport 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 PARKEN Sport and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and Beijing Media, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Beijing MediaLimited.
Diversification Opportunities for PARKEN Sport and Beijing MediaLimited
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PARKEN and Beijing is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between PARKEN Sport and Beijing MediaLimited
Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 1.13 times more return on investment than Beijing MediaLimited. However, PARKEN Sport is 1.13 times more volatile than Beijing Media. It trades about 0.06 of its potential returns per unit of risk. Beijing Media is currently generating about 0.01 per unit of risk. If you would invest 579.00 in PARKEN Sport Entertainment on August 28, 2024 and sell it today you would earn a total of 1,036 from holding PARKEN Sport Entertainment or generate 178.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. Beijing Media
Performance |
| Timeline |
| PARKEN Sport Enterta |
| Beijing MediaLimited |
PARKEN Sport and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and Beijing MediaLimited
The main advantage of trading using opposite PARKEN Sport and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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.| PARKEN Sport vs. The Walt Disney | PARKEN Sport vs. Superior Plus Corp | PARKEN Sport vs. NMI Holdings | PARKEN Sport vs. Origin Agritech |
| Beijing MediaLimited vs. The Interpublic Group | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings | Beijing MediaLimited vs. Origin Agritech |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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