Correlation Between Beijing Capital and Bakkt Holdings

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Can any of the company-specific risk be diversified away by investing in both Beijing Capital and Bakkt Holdings 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 Capital and Bakkt Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Capital International and Bakkt Holdings, you can compare the effects of market volatilities on Beijing Capital and Bakkt Holdings 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 Capital with a short position of Bakkt Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Capital and Bakkt Holdings.

Diversification Opportunities for Beijing Capital and Bakkt Holdings

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Beijing and Bakkt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Capital International and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings and Beijing Capital 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 Capital International are associated (or correlated) with Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of Beijing Capital i.e., Beijing Capital and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Beijing Capital and Bakkt Holdings

If you would invest  0.00  in Beijing Capital International on September 1, 2022 and sell it today you would earn a total of  0.00  from holding Beijing Capital International or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Beijing Capital International  vs.  Bakkt Holdings

 Performance (%) 
       Timeline  
Beijing Capital Inte 
Beijing Performance
0 of 100
Over the last 90 days Beijing Capital International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Beijing Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Bakkt Holdings 
Bakkt Performance
0 of 100
Over the last 90 days Bakkt Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in December 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bakkt Price Channel

Beijing Capital and Bakkt Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beijing Capital and Bakkt Holdings

The main advantage of trading using opposite Beijing Capital and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Capital position performs unexpectedly, Bakkt Holdings 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 Bakkt Holdings will offset losses from the drop in Bakkt Holdings' long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Beijing Capital as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Beijing Capital's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Beijing Capital's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Beijing Capital International.
The idea behind Beijing Capital International and Bakkt Holdings 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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