Correlation Between Beijing Wandong and Kunwu Jiuding

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

By analyzing existing cross correlation between Beijing Wandong Medical and Kunwu Jiuding Investment, you can compare the effects of market volatilities on Beijing Wandong and Kunwu Jiuding 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 Wandong with a short position of Kunwu Jiuding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Wandong and Kunwu Jiuding.

Diversification Opportunities for Beijing Wandong and Kunwu Jiuding

0.57

Correlation Coefficient

Beijing Wandong  Kunwu Jiuding

Very weak diversification

The 3 months correlation between Beijing and Kunwu is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Wandong Medical and Kunwu Jiuding Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunwu Jiuding Investment and Beijing Wandong 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 Wandong Medical are associated (or correlated) with Kunwu Jiuding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunwu Jiuding Investment has no effect on the direction of Beijing Wandong i.e., Beijing Wandong and Kunwu Jiuding go up and down completely randomly.

Pair Corralation between Beijing Wandong and Kunwu Jiuding

Assuming the 90 days trading horizon Beijing Wandong Medical is expected to generate 0.82 times more return on investment than Kunwu Jiuding. However, Beijing Wandong Medical is 1.22 times less risky than Kunwu Jiuding. It trades about 0.11 of its potential returns per unit of risk. Kunwu Jiuding Investment is currently generating about 0.01 per unit of risk. If you would invest  1,322  in Beijing Wandong Medical on September 26, 2024 and sell it today you would earn a total of  248.00  from holding Beijing Wandong Medical or generate 18.76% return on investment over 90 days.

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

Beijing Wandong Medical  vs.  Kunwu Jiuding Investment

Beijing Wandong Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Wandong Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Wandong sustained solid returns over the last few months and may actually be approaching a breakup point.

Kunwu Jiuding Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kunwu Jiuding Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kunwu Jiuding 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 Wandong and Kunwu Jiuding

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

The idea behind Beijing Wandong Medical and Kunwu Jiuding Investment 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.