Correlation Between Bohai Leasing and Anshan Senyuan

Can any of the company-specific risk be diversified away by investing in both Bohai Leasing and Anshan Senyuan 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 Bohai Leasing and Anshan Senyuan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bohai Leasing Co and Anshan Senyuan Road, you can compare the effects of market volatilities on Bohai Leasing and Anshan Senyuan 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 Bohai Leasing with a short position of Anshan Senyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohai Leasing and Anshan Senyuan.

Diversification Opportunities for Bohai Leasing and Anshan Senyuan

0.18

Correlation Coefficient

Bohai Leasing  Anshan Senyuan

Average diversification

The 3 months correlation between Bohai and Anshan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bohai Leasing Co and Anshan Senyuan Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anshan Senyuan Road and Bohai Leasing 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 Bohai Leasing Co are associated (or correlated) with Anshan Senyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anshan Senyuan Road has no effect on the direction of Bohai Leasing i.e., Bohai Leasing and Anshan Senyuan go up and down completely randomly.

Pair Corralation between Bohai Leasing and Anshan Senyuan

Assuming the 90 days trading horizon Bohai Leasing is expected to generate 3.41 times less return on investment than Anshan Senyuan. But when comparing it to its historical volatility, Bohai Leasing Co is 2.09 times less risky than Anshan Senyuan. It trades about 0.04 of its potential returns per unit of risk. Anshan Senyuan Road is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  309.00  in Anshan Senyuan Road on October 11, 2024 and sell it today you would earn a total of  648.00  from holding Anshan Senyuan Road or generate 209.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Bohai Leasing Co  vs.  Anshan Senyuan Road

Bohai Leasing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bohai Leasing Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bohai Leasing sustained solid returns over the last few months and may actually be approaching a breakup point.

Anshan Senyuan Road

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anshan Senyuan Road are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anshan Senyuan may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bohai Leasing and Anshan Senyuan

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

The idea behind Bohai Leasing Co and Anshan Senyuan Road 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.