Correlation Between Hunan Investment and Bosera CMSK

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

Diversification Opportunities for Hunan Investment and Bosera CMSK

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Hunan Investment and Bosera CMSK

Assuming the 90 days trading horizon Hunan Investment Group is expected to under-perform the Bosera CMSK. In addition to that, Hunan Investment is 4.37 times more volatile than Bosera CMSK Industrial. It trades about -0.01 of its total potential returns per unit of risk. Bosera CMSK Industrial is currently generating about 0.21 per unit of volatility. If you would invest  193.00  in Bosera CMSK Industrial on October 6, 2024 and sell it today you would earn a total of  13.00  from holding Bosera CMSK Industrial or generate 6.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hunan Investment Group  vs.  Bosera CMSK Industrial

 Performance 
       Timeline  
Hunan Investment 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Hunan Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Bosera CMSK Industrial 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bosera CMSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hunan Investment and Bosera CMSK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hunan Investment and Bosera CMSK

The main advantage of trading using opposite Hunan Investment and Bosera CMSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunan Investment position performs unexpectedly, Bosera CMSK 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 Bosera CMSK will offset losses from the drop in Bosera CMSK's long position.
The idea behind Hunan Investment Group and Bosera CMSK Industrial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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