Correlation Between NYSE Composite and Beijing Gas
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Beijing Gas 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 NYSE Composite and Beijing Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Beijing Gas Blue, you can compare the effects of market volatilities on NYSE Composite and Beijing Gas 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 NYSE Composite with a short position of Beijing Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Beijing Gas.
Diversification Opportunities for NYSE Composite and Beijing Gas
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Beijing is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Beijing Gas Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Gas Blue and NYSE Composite 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 NYSE Composite are associated (or correlated) with Beijing Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Gas Blue has no effect on the direction of NYSE Composite i.e., NYSE Composite and Beijing Gas go up and down completely randomly.
Pair Corralation between NYSE Composite and Beijing Gas
Assuming the 90 days trading horizon NYSE Composite is expected to generate 128.88 times less return on investment than Beijing Gas. But when comparing it to its historical volatility, NYSE Composite is 106.5 times less risky than Beijing Gas. It trades about 0.08 of its potential returns per unit of risk. Beijing Gas Blue is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.08 in Beijing Gas Blue on September 3, 2024 and sell it today you would lose (4.67) from holding Beijing Gas Blue or give up 91.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Beijing Gas Blue
Performance |
| Timeline |
NYSE Composite and Beijing Gas Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Beijing Gas Blue
Pair trading matchups for Beijing Gas
Pair Trading with NYSE Composite and Beijing Gas
The main advantage of trading using opposite NYSE Composite and Beijing Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Beijing Gas 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 Gas will offset losses from the drop in Beijing Gas' long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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