Correlation Between Jiaozuo Wanfang and BOE Technology

Can any of the company-specific risk be diversified away by investing in both Jiaozuo Wanfang and BOE Technology 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 Jiaozuo Wanfang and BOE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiaozuo Wanfang Aluminum and BOE Technology Group, you can compare the effects of market volatilities on Jiaozuo Wanfang and BOE Technology 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 Jiaozuo Wanfang with a short position of BOE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiaozuo Wanfang and BOE Technology.

Diversification Opportunities for Jiaozuo Wanfang and BOE Technology

0.63

Correlation Coefficient

Jiaozuo Wanfang  BOE Technology

Poor diversification

The 3 months correlation between Jiaozuo and BOE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Jiaozuo Wanfang Aluminum and BOE Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOE Technology Group and Jiaozuo Wanfang 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 Jiaozuo Wanfang Aluminum are associated (or correlated) with BOE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOE Technology Group has no effect on the direction of Jiaozuo Wanfang i.e., Jiaozuo Wanfang and BOE Technology go up and down completely randomly.

Pair Corralation between Jiaozuo Wanfang and BOE Technology

Assuming the 90 days trading horizon Jiaozuo Wanfang Aluminum is expected to under-perform the BOE Technology. In addition to that, Jiaozuo Wanfang is 1.44 times more volatile than BOE Technology Group. It trades about -0.24 of its total potential returns per unit of risk. BOE Technology Group is currently generating about -0.18 per unit of volatility. If you would invest  466.00  in BOE Technology Group on October 8, 2024 and sell it today you would lose (46.00) from holding BOE Technology Group or give up 9.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jiaozuo Wanfang Aluminum  vs.  BOE Technology Group

Jiaozuo Wanfang Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiaozuo Wanfang Aluminum 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.

BOE Technology Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOE Technology 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.

Pair Trading with Jiaozuo Wanfang and BOE Technology

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

The idea behind Jiaozuo Wanfang Aluminum and BOE Technology Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.