Correlation Between UGI and Beijing Gas
Can any of the company-specific risk be diversified away by investing in both UGI 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 UGI and Beijing Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corporation and Beijing Gas Blue, you can compare the effects of market volatilities on UGI 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 UGI with a short position of Beijing Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI and Beijing Gas.
Diversification Opportunities for UGI and Beijing Gas
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between UGI and Beijing is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp. 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 UGI 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 UGI Corporation 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 UGI i.e., UGI and Beijing Gas go up and down completely randomly.
Pair Corralation between UGI and Beijing Gas
Considering the 90-day investment horizon UGI is expected to generate 31.62 times less return on investment than Beijing Gas. But when comparing it to its historical volatility, UGI Corporation is 37.31 times less risky than Beijing Gas. It trades about 0.16 of its potential returns per unit of risk. Beijing Gas Blue is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.41 in Beijing Gas Blue on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Beijing Gas Blue or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
UGI Corp. vs. Beijing Gas Blue
Performance |
| Timeline |
| UGI Corporation |
| Beijing Gas Blue |
UGI and Beijing Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI and Beijing Gas
The main advantage of trading using opposite UGI and Beijing Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI 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.The idea behind UGI Corporation and Beijing Gas Blue 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 Gas vs. NewJersey Resources | Beijing Gas vs. Atmos Energy | Beijing Gas vs. UGI Corporation | Beijing Gas vs. Chesapeake Utilities |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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