Correlation Between PUBLIC STORAGE and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both PUBLIC STORAGE 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 PUBLIC STORAGE and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PUBLIC STORAGE PRFO and Beijing Media, you can compare the effects of market volatilities on PUBLIC STORAGE 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 PUBLIC STORAGE with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and Beijing MediaLimited.
Diversification Opportunities for PUBLIC STORAGE and Beijing MediaLimited
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PUBLIC and Beijing is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and PUBLIC STORAGE 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 PUBLIC STORAGE PRFO 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 PUBLIC STORAGE i.e., PUBLIC STORAGE and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between PUBLIC STORAGE and Beijing MediaLimited
Assuming the 90 days trading horizon PUBLIC STORAGE is expected to generate 2.75 times less return on investment than Beijing MediaLimited. But when comparing it to its historical volatility, PUBLIC STORAGE PRFO is 5.92 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 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.20 in Beijing Media on September 1, 2024 and sell it today you would lose (2.00) from holding Beijing Media or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PUBLIC STORAGE PRFO vs. Beijing Media
Performance |
| Timeline |
| PUBLIC STORAGE PRFO |
| Beijing MediaLimited |
PUBLIC STORAGE and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PUBLIC STORAGE and Beijing MediaLimited
The main advantage of trading using opposite PUBLIC STORAGE and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUBLIC STORAGE 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.| PUBLIC STORAGE vs. Lyxor 1 | PUBLIC STORAGE vs. Xtrackers ShortDAX | PUBLIC STORAGE vs. Xtrackers LevDAX | PUBLIC STORAGE vs. Superior Plus Corp |
| Beijing MediaLimited vs. Publicis Groupe SA | Beijing MediaLimited vs. WPP PLC ADR | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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