Correlation Between Valmont Industries and Beijing Enterprises
Can any of the company-specific risk be diversified away by investing in both Valmont Industries and Beijing Enterprises 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 Valmont Industries and Beijing Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmont Industries and Beijing Enterprises Holdings, you can compare the effects of market volatilities on Valmont Industries and Beijing Enterprises 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 Valmont Industries with a short position of Beijing Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmont Industries and Beijing Enterprises.
Diversification Opportunities for Valmont Industries and Beijing Enterprises
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Valmont and Beijing is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Beijing Enterprises Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enterprises and Valmont Industries 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 Valmont Industries are associated (or correlated) with Beijing Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enterprises has no effect on the direction of Valmont Industries i.e., Valmont Industries and Beijing Enterprises go up and down completely randomly.
Pair Corralation between Valmont Industries and Beijing Enterprises
Considering the 90-day investment horizon Valmont Industries is expected to generate 0.46 times more return on investment than Beijing Enterprises. However, Valmont Industries is 2.17 times less risky than Beijing Enterprises. It trades about 0.13 of its potential returns per unit of risk. Beijing Enterprises Holdings is currently generating about 0.01 per unit of risk. If you would invest 21,045 in Valmont Industries on August 27, 2024 and sell it today you would earn a total of 13,164 from holding Valmont Industries or generate 62.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.28% |
| Values | Daily Returns |
Valmont Industries vs. Beijing Enterprises Holdings
Performance |
| Timeline |
| Valmont Industries |
| Beijing Enterprises |
Valmont Industries and Beijing Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmont Industries and Beijing Enterprises
The main advantage of trading using opposite Valmont Industries and Beijing Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmont Industries position performs unexpectedly, Beijing Enterprises 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 Enterprises will offset losses from the drop in Beijing Enterprises' long position.| Valmont Industries vs. Matthews International | Valmont Industries vs. Griffon | Valmont Industries vs. Brookfield Business Partners | Valmont Industries vs. MDU Resources Group |
| Beijing Enterprises vs. Honeywell International | Beijing Enterprises vs. MDU Resources Group | Beijing Enterprises vs. Compass Diversified Holdings | Beijing Enterprises vs. Valmont Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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