Correlation Between Beijing Kaiwen and China Fund

Can any of the company-specific risk be diversified away by investing in both Beijing Kaiwen and China Fund 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 Beijing Kaiwen and China Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beijing Kaiwen Education and China Fund Management, you can compare the effects of market volatilities on Beijing Kaiwen and China Fund 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 Beijing Kaiwen with a short position of China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Kaiwen and China Fund.

Diversification Opportunities for Beijing Kaiwen and China Fund

-0.19

Correlation Coefficient

Beijing Kaiwen  China Fund

Good diversification

The 3 months correlation between Beijing and China is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kaiwen Education and China Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund Management and Beijing Kaiwen 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 Beijing Kaiwen Education are associated (or correlated) with China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund Management has no effect on the direction of Beijing Kaiwen i.e., Beijing Kaiwen and China Fund go up and down completely randomly.

Pair Corralation between Beijing Kaiwen and China Fund

Assuming the 90 days trading horizon Beijing Kaiwen Education is expected to generate 10.02 times more return on investment than China Fund. However, Beijing Kaiwen is 10.02 times more volatile than China Fund Management. It trades about 0.18 of its potential returns per unit of risk. China Fund Management is currently generating about 0.08 per unit of risk. If you would invest  377.00  in Beijing Kaiwen Education on September 12, 2024 and sell it today you would earn a total of  172.00  from holding Beijing Kaiwen Education or generate 45.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Beijing Kaiwen Education  vs.  China Fund Management

Beijing Kaiwen Education

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Kaiwen Education are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Kaiwen sustained solid returns over the last few months and may actually be approaching a breakup point.

China Fund Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Fund Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beijing Kaiwen and China Fund

The main advantage of trading using opposite Beijing Kaiwen and China Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Kaiwen position performs unexpectedly, China Fund 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 Fund will offset losses from the drop in China Fund's long position.

The idea behind Beijing Kaiwen Education and China Fund Management 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..