Correlation Between Perficient and Beijing Capital

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

Diversification Opportunities for Perficient and Beijing Capital

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Perficient and Beijing is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Perficient and Beijing Capital International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Capital Inte and Perficient 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 Perficient are associated (or correlated) with Beijing Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Capital Inte has no effect on the direction of Perficient i.e., Perficient and Beijing Capital go up and down completely randomly.

Pair Corralation between Perficient and Beijing Capital

Given the investment horizon of 90 days Perficient is expected to generate 1.55 times less return on investment than Beijing Capital. But when comparing it to its historical volatility, Perficient is 1.17 times less risky than Beijing Capital. It trades about 0.2 of its potential returns per unit of risk. Beijing Capital International is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Beijing Capital International on September 4, 2022 and sell it today you would earn a total of  10.00  from holding Beijing Capital International or generate 19.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Perficient  vs.  Beijing Capital International

 Performance (%) 
       Timeline  
Perficient 
Perficient Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Perficient are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Perficient is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Perficient Price Channel

Beijing Capital Inte 
Beijing Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Capital International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Beijing Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Beijing Price Channel

Perficient and Beijing Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Perficient and Beijing Capital

The main advantage of trading using opposite Perficient and Beijing Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perficient position performs unexpectedly, Beijing Capital 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 Beijing Capital will offset losses from the drop in Beijing Capital's long position.
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The idea behind Perficient and Beijing Capital International 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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