Correlation Between Beijing Capital and Adverum Biotechnologies

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Can any of the company-specific risk be diversified away by investing in both Beijing Capital and Adverum Biotechnologies 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 Adverum Biotechnologies 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 Adverum Biotechnologies, you can compare the effects of market volatilities on Beijing Capital and Adverum Biotechnologies 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 Adverum Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Capital and Adverum Biotechnologies.

Diversification Opportunities for Beijing Capital and Adverum Biotechnologies

-0.39
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Beijing Capital and Adverum Biotechnologies

Assuming the 90 days horizon Beijing Capital International is expected to generate 0.81 times more return on investment than Adverum Biotechnologies. However, Beijing Capital International is 1.23 times less risky than Adverum Biotechnologies. It trades about 0.09 of its potential returns per unit of risk. Adverum Biotechnologies is currently generating about -0.07 per unit of risk. If you would invest  306.00  in Beijing Capital International on September 10, 2022 and sell it today you would earn a total of  18.00  from holding Beijing Capital International or generate 5.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Beijing Capital International  vs.  Adverum Biotechnologies

 Performance (%) 
       Timeline  
Beijing Capital Inte 
Beijing Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Capital International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Beijing Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Beijing Price Channel

Adverum Biotechnologies 
Adverum Performance
0 of 100
Over the last 90 days Adverum Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Adverum Price Channel

Beijing Capital and Adverum Biotechnologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beijing Capital and Adverum Biotechnologies

The main advantage of trading using opposite Beijing Capital and Adverum Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Capital position performs unexpectedly, Adverum Biotechnologies 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 Adverum Biotechnologies will offset losses from the drop in Adverum Biotechnologies' long position.
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The idea behind Beijing Capital International and Adverum Biotechnologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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