Correlation Between Bus Online and CIMC Vehicles

Can any of the company-specific risk be diversified away by investing in both Bus Online and CIMC Vehicles 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 Bus Online and CIMC Vehicles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bus Online Co and CIMC Vehicles Co, you can compare the effects of market volatilities on Bus Online and CIMC Vehicles 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 Bus Online with a short position of CIMC Vehicles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bus Online and CIMC Vehicles.

Diversification Opportunities for Bus Online and CIMC Vehicles

0.69

Correlation Coefficient

Bus Online  CIMC Vehicles

Poor diversification

The 3 months correlation between Bus and CIMC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and CIMC Vehicles Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMC Vehicles and Bus Online 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 Bus Online Co are associated (or correlated) with CIMC Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMC Vehicles has no effect on the direction of Bus Online i.e., Bus Online and CIMC Vehicles go up and down completely randomly.

Pair Corralation between Bus Online and CIMC Vehicles

Assuming the 90 days trading horizon Bus Online Co is expected to generate 2.69 times more return on investment than CIMC Vehicles. However, Bus Online is 2.69 times more volatile than CIMC Vehicles Co. It trades about -0.05 of its potential returns per unit of risk. CIMC Vehicles Co is currently generating about -0.18 per unit of risk. If you would invest  492.00  in Bus Online Co on October 21, 2024 and sell it today you would lose (52.00) from holding Bus Online Co or give up 10.57% of portfolio value over 90 days.

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

Bus Online Co  vs.  CIMC Vehicles Co

Bus Online

Risk-Adjusted Performance

0 of 100

Very Weak

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

CIMC Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMC Vehicles Co 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 Bus Online and CIMC Vehicles

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

The idea behind Bus Online Co and CIMC Vehicles Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.