Correlation Between McDonalds Corp and Burning Rock

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

Diversification Opportunities for McDonalds Corp and Burning Rock

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between McDonalds and Burning is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds Corp and Burning Rock Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burning Rock Biotech and McDonalds Corp 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 McDonalds Corp are associated (or correlated) with Burning Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burning Rock Biotech has no effect on the direction of McDonalds Corp i.e., McDonalds Corp and Burning Rock go up and down completely randomly.

Pair Corralation between McDonalds Corp and Burning Rock

Considering the 90-day investment horizon McDonalds Corp is expected to generate 0.2 times more return on investment than Burning Rock. However, McDonalds Corp is 4.9 times less risky than Burning Rock. It trades about 0.01 of its potential returns per unit of risk. Burning Rock Biotech is currently generating about -0.11 per unit of risk. If you would invest  23,069  in McDonalds Corp on July 9, 2022 and sell it today you would earn a total of  247.00  from holding McDonalds Corp or generate 1.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

McDonalds Corp  vs.  Burning Rock Biotech

 Performance (%) 
       Timeline  
McDonalds Corp 
McDonalds Performance
0 of 100
Over the last 90 days McDonalds Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

McDonalds Price Channel

Burning Rock Biotech 
Burning Performance
0 of 100
Over the last 90 days Burning Rock Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Burning Price Channel

McDonalds Corp and Burning Rock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with McDonalds Corp and Burning Rock

The main advantage of trading using opposite McDonalds Corp and Burning Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds Corp position performs unexpectedly, Burning Rock 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 Burning Rock will offset losses from the drop in Burning Rock's long position.
McDonalds Corp vs. Amazon Inc
The idea behind McDonalds Corp and Burning Rock Biotech 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.
Burning Rock vs. Amazon Inc
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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