Correlation Between Beijing Media and Fukuoka Financial

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

By analyzing existing cross correlation between Beijing Media and Fukuoka Financial Group, you can compare the effects of market volatilities on Beijing Media and Fukuoka Financial 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 Media with a short position of Fukuoka Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Media and Fukuoka Financial.

Diversification Opportunities for Beijing Media and Fukuoka Financial

-0.24

Correlation Coefficient

Beijing Media  Fukuoka Financial

Very good diversification

The 3 months correlation between Beijing and Fukuoka is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Fukuoka Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuoka Financial and Beijing Media 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 Media are associated (or correlated) with Fukuoka Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fukuoka Financial has no effect on the direction of Beijing Media i.e., Beijing Media and Fukuoka Financial go up and down completely randomly.

Pair Corralation between Beijing Media and Fukuoka Financial

Assuming the 90 days horizon Beijing Media is expected to under-perform the Fukuoka Financial. In addition to that, Beijing Media is 1.58 times more volatile than Fukuoka Financial Group. It trades about 0.0 of its total potential returns per unit of risk. Fukuoka Financial Group is currently generating about 0.04 per unit of volatility. If you would invest  2,520  in Fukuoka Financial Group on September 5, 2024 and sell it today you would earn a total of  200.00  from holding Fukuoka Financial Group or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Beijing Media  vs.  Fukuoka Financial Group

Beijing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Beijing Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Fukuoka Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuoka Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fukuoka Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Media and Fukuoka Financial

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

The idea behind Beijing Media and Fukuoka Financial Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.