Correlation Between BEIJJINGNENG CLERGHYC1 and Fortum Oyj

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

By analyzing existing cross correlation between BEIJJINGNENG CLERGHYC1 and Fortum Oyj, you can compare the effects of market volatilities on BEIJJINGNENG CLERGHYC1 and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEIJJINGNENG CLERGHYC1 and Fortum Oyj.

Diversification Opportunities for BEIJJINGNENG CLERGHYC1 and Fortum Oyj

0.39

Correlation Coefficient

BEIJJINGNENG CLERGHYC1  Fortum Oyj

Weak diversification

The 3 months correlation between BEIJJINGNENG and Fortum is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BEIJJINGNENG CLERGHYC1 and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of BEIJJINGNENG CLERGHYC1 i.e., BEIJJINGNENG CLERGHYC1 and Fortum Oyj go up and down completely randomly.

Pair Corralation between BEIJJINGNENG CLERGHYC1 and Fortum Oyj

Assuming the 90 days horizon BEIJJINGNENG CLERGHYC1 is expected to generate 2.83 times more return on investment than Fortum Oyj. However, BEIJJINGNENG CLERGHYC1 is 2.83 times more volatile than Fortum Oyj. It trades about 0.08 of its potential returns per unit of risk. Fortum Oyj is currently generating about 0.02 per unit of risk. If you would invest  19.00  in BEIJJINGNENG CLERGHYC1 on September 13, 2024 and sell it today you would earn a total of  3.00  from holding BEIJJINGNENG CLERGHYC1 or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

BEIJJINGNENG CLERGHYC1  vs.  Fortum Oyj

BEIJJINGNENG CLERGHYC1

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BEIJJINGNENG CLERGHYC1 are ranked lower than 6 (%) 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.

Fortum Oyj

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortum Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fortum Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BEIJJINGNENG CLERGHYC1 and Fortum Oyj

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

The idea behind BEIJJINGNENG CLERGHYC1 and Fortum Oyj 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.