Correlation Between BEIJJINGNENG CLERGHYC1 and HOKURIKU

Can any of the company-specific risk be diversified away by investing in both BEIJJINGNENG CLERGHYC1 and HOKURIKU 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 BEIJJINGNENG CLERGHYC1 and HOKURIKU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BEIJJINGNENG CLERGHYC1 and HOKURIKU EL PWR, you can compare the effects of market volatilities on BEIJJINGNENG CLERGHYC1 and HOKURIKU 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 BEIJJINGNENG CLERGHYC1 with a short position of HOKURIKU. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEIJJINGNENG CLERGHYC1 and HOKURIKU.

Diversification Opportunities for BEIJJINGNENG CLERGHYC1 and HOKURIKU

-0.01

Correlation Coefficient

BEIJJINGNENG CLERGHYC1  HOKURIKU

Good diversification

The 3 months correlation between BEIJJINGNENG and HOKURIKU is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BEIJJINGNENG CLERGHYC1 and HOKURIKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOKURIKU EL PWR and BEIJJINGNENG CLERGHYC1 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 BEIJJINGNENG CLERGHYC1 are associated (or correlated) with HOKURIKU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOKURIKU EL PWR has no effect on the direction of BEIJJINGNENG CLERGHYC1 i.e., BEIJJINGNENG CLERGHYC1 and HOKURIKU go up and down completely randomly.

Pair Corralation between BEIJJINGNENG CLERGHYC1 and HOKURIKU

Assuming the 90 days horizon BEIJJINGNENG CLERGHYC1 is expected to generate 1.49 times more return on investment than HOKURIKU. However, BEIJJINGNENG CLERGHYC1 is 1.49 times more volatile than HOKURIKU EL PWR. It trades about 0.06 of its potential returns per unit of risk. HOKURIKU EL PWR is currently generating about -0.05 per unit of risk. If you would invest  19.00  in BEIJJINGNENG CLERGHYC1 on September 12, 2024 and sell it today you would earn a total of  2.00  from holding BEIJJINGNENG CLERGHYC1 or generate 10.53% return on investment over 90 days.

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

BEIJJINGNENG CLERGHYC1  vs.  HOKURIKU EL PWR

BEIJJINGNENG CLERGHYC1

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BEIJJINGNENG CLERGHYC1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BEIJJINGNENG CLERGHYC1 reported solid returns over the last few months and may actually be approaching a breakup point.

HOKURIKU EL PWR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOKURIKU EL PWR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BEIJJINGNENG CLERGHYC1 and HOKURIKU

The main advantage of trading using opposite BEIJJINGNENG CLERGHYC1 and HOKURIKU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEIJJINGNENG CLERGHYC1 position performs unexpectedly, HOKURIKU 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 HOKURIKU will offset losses from the drop in HOKURIKU's long position.

The idea behind BEIJJINGNENG CLERGHYC1 and HOKURIKU EL PWR 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.