Correlation Between BJs Restaurants and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and CHINA EAST 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 BJs Restaurants and CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and CHINA EAST ED, you can compare the effects of market volatilities on BJs Restaurants and CHINA EAST 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 BJs Restaurants with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and CHINA EAST.
Diversification Opportunities for BJs Restaurants and CHINA EAST
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and CHINA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and CHINA EAST go up and down completely randomly.
Pair Corralation between BJs Restaurants and CHINA EAST
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.74 times less return on investment than CHINA EAST. But when comparing it to its historical volatility, BJs Restaurants is 1.96 times less risky than CHINA EAST. It trades about 0.02 of its potential returns per unit of risk. CHINA EAST ED is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 32.00 in CHINA EAST ED on October 28, 2024 and sell it today you would lose (2.00) from holding CHINA EAST ED or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BJs Restaurants vs. CHINA EAST ED
Performance |
| Timeline |
| BJs Restaurants |
| CHINA EAST ED |
BJs Restaurants and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and CHINA EAST
The main advantage of trading using opposite BJs Restaurants and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, CHINA EAST 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 CHINA EAST will offset losses from the drop in CHINA EAST's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
| CHINA EAST vs. Zoom Video Communications | CHINA EAST vs. Western Copper and | CHINA EAST vs. Zijin Mining Group | CHINA EAST vs. GALENA MINING LTD |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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