Correlation Between SPACE and Beijing Capital
Can any of the company-specific risk be diversified away by investing in both SPACE and Beijing Capital 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 SPACE and Beijing Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Beijing Capital International, you can compare the effects of market volatilities on SPACE and Beijing Capital 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 SPACE with a short position of Beijing Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Beijing Capital.
Diversification Opportunities for SPACE and Beijing Capital
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPACE and Beijing is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Beijing Capital International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Capital Inte and SPACE 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 SPACE are associated (or correlated) with Beijing Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Capital Inte has no effect on the direction of SPACE i.e., SPACE and Beijing Capital go up and down completely randomly.
Pair Corralation between SPACE and Beijing Capital
Assuming the 90 days horizon SPACE is expected to generate 0.99 times more return on investment than Beijing Capital. However, SPACE is 1.01 times less risky than Beijing Capital. It trades about 0.51 of its potential returns per unit of risk. Beijing Capital International is currently generating about -0.04 per unit of risk. If you would invest 36.00 in SPACE on September 4, 2024 and sell it today you would earn a total of 23.00 from holding SPACE or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPACE vs. Beijing Capital International
Performance |
| Timeline |
| SPACE |
| Beijing Capital Inte |
SPACE and Beijing Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Beijing Capital
The main advantage of trading using opposite SPACE and Beijing Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, Beijing Capital 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 Capital will offset losses from the drop in Beijing Capital's long position.The idea behind SPACE and Beijing Capital International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Beijing Capital vs. Aena SME SA | Beijing Capital vs. SPACE | Beijing Capital vs. Bayview Acquisition Corp | Beijing Capital vs. T Rowe Price |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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