Correlation Between BEIJJINGNENG CLERGHYC1 and VERBUND AG

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

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

Diversification Opportunities for BEIJJINGNENG CLERGHYC1 and VERBUND AG

-0.03

Correlation Coefficient

BEIJJINGNENG CLERGHYC1  VERBUND AG

Good diversification

The 3 months correlation between BEIJJINGNENG and VERBUND is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BEIJJINGNENG CLERGHYC1 and VERBUND AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG ADR 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 VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG ADR has no effect on the direction of BEIJJINGNENG CLERGHYC1 i.e., BEIJJINGNENG CLERGHYC1 and VERBUND AG go up and down completely randomly.

Pair Corralation between BEIJJINGNENG CLERGHYC1 and VERBUND AG

Assuming the 90 days horizon BEIJJINGNENG CLERGHYC1 is expected to generate 2.43 times more return on investment than VERBUND AG. However, BEIJJINGNENG CLERGHYC1 is 2.43 times more volatile than VERBUND AG ADR. It trades about 0.07 of its potential returns per unit of risk. VERBUND AG ADR is currently generating about 0.04 per unit of risk. If you would invest  21.00  in BEIJJINGNENG CLERGHYC1 on September 13, 2024 and sell it today you would earn a total of  1.00  from holding BEIJJINGNENG CLERGHYC1 or generate 4.76% 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.  VERBUND AG ADR

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.

VERBUND AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VERBUND AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VERBUND AG 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 VERBUND AG

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

The idea behind BEIJJINGNENG CLERGHYC1 and VERBUND AG ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.