Correlation Between Volkswagen and Beijing Capital
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Beijing Capital 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 Volkswagen and Beijing Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Pref and Beijing Capital International, you can compare the effects of market volatilities on Volkswagen and Beijing Capital 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 Volkswagen with a short position of Beijing Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Beijing Capital.
Diversification Opportunities for Volkswagen and Beijing Capital
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and Beijing is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Beijing Capital International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Capital Inte and Volkswagen 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 Volkswagen AG Pref are associated (or correlated) with Beijing Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Capital Inte has no effect on the direction of Volkswagen i.e., Volkswagen and Beijing Capital go up and down completely randomly.
Pair Corralation between Volkswagen and Beijing Capital
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Beijing Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 3.66 times less risky than Beijing Capital. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Beijing Capital International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Beijing Capital International on August 25, 2024 and sell it today you would earn a total of 2.00 from holding Beijing Capital International or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Pref vs. Beijing Capital International
Performance |
| Timeline |
| Volkswagen AG Pref |
| Beijing Capital Inte |
Volkswagen and Beijing Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Beijing Capital
The main advantage of trading using opposite Volkswagen and Beijing Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Beijing Capital 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 Capital will offset losses from the drop in Beijing Capital's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. AerSale Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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