Correlation Between Natural Health and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and Beijing Media, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Beijing MediaLimited.
Diversification Opportunities for Natural Health and Beijing MediaLimited
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and Beijing is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and Natural Health 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 Natural Health Trends 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 Natural Health i.e., Natural Health and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between Natural Health and Beijing MediaLimited
Assuming the 90 days trading horizon Natural Health Trends is expected to generate 0.61 times more return on investment than Beijing MediaLimited. However, Natural Health Trends is 1.65 times less risky than Beijing MediaLimited. It trades about -0.03 of its potential returns per unit of risk. Beijing Media is currently generating about -0.04 per unit of risk. If you would invest 576.00 in Natural Health Trends on September 2, 2024 and sell it today you would lose (66.00) from holding Natural Health Trends or give up 11.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. Beijing Media
Performance |
| Timeline |
| Natural Health Trends |
| Beijing MediaLimited |
Natural Health and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Beijing MediaLimited
The main advantage of trading using opposite Natural Health and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. NURAN WIRELESS INC | Natural Health vs. YOOMA WELLNESS INC | Natural Health vs. Haverty Furniture Companies | Natural Health vs. LGI Homes |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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