Correlation Between Cofco Biochemical and Fushun Special

Can any of the company-specific risk be diversified away by investing in both Cofco Biochemical and Fushun Special 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 Cofco Biochemical and Fushun Special into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cofco Biochemical Anhui and Fushun Special Steel, you can compare the effects of market volatilities on Cofco Biochemical and Fushun Special 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 Cofco Biochemical with a short position of Fushun Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cofco Biochemical and Fushun Special.

Diversification Opportunities for Cofco Biochemical and Fushun Special

0.9

Correlation Coefficient

Cofco Biochemical  Fushun Special

Almost no diversification

The 3 months correlation between Cofco and Fushun is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cofco Biochemical Anhui and Fushun Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fushun Special Steel and Cofco Biochemical 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 Cofco Biochemical Anhui are associated (or correlated) with Fushun Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fushun Special Steel has no effect on the direction of Cofco Biochemical i.e., Cofco Biochemical and Fushun Special go up and down completely randomly.

Pair Corralation between Cofco Biochemical and Fushun Special

Assuming the 90 days trading horizon Cofco Biochemical Anhui is expected to generate 1.04 times more return on investment than Fushun Special. However, Cofco Biochemical is 1.04 times more volatile than Fushun Special Steel. It trades about -0.05 of its potential returns per unit of risk. Fushun Special Steel is currently generating about -0.15 per unit of risk. If you would invest  597.00  in Cofco Biochemical Anhui on December 5, 2024 and sell it today you would lose (34.00) from holding Cofco Biochemical Anhui or give up 5.7% of portfolio value over 90 days.

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

Cofco Biochemical Anhui  vs.  Fushun Special Steel

Cofco Biochemical Anhui

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cofco Biochemical Anhui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cofco Biochemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fushun Special Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fushun Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cofco Biochemical and Fushun Special

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

The idea behind Cofco Biochemical Anhui and Fushun Special Steel 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.