Correlation Between Bus Online and Dr Peng

Can any of the company-specific risk be diversified away by investing in both Bus Online and Dr Peng 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 Dr Peng 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 Dr Peng Telecom, you can compare the effects of market volatilities on Bus Online and Dr Peng 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 Dr Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bus Online and Dr Peng.

Diversification Opportunities for Bus Online and Dr Peng

-0.09

Correlation Coefficient

Bus Online  Dr Peng

Good diversification

The 3 months correlation between Bus and 600804 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Dr Peng Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Peng Telecom 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 Dr Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Peng Telecom has no effect on the direction of Bus Online i.e., Bus Online and Dr Peng go up and down completely randomly.

Pair Corralation between Bus Online and Dr Peng

Assuming the 90 days trading horizon Bus Online Co is expected to generate 0.78 times more return on investment than Dr Peng. However, Bus Online Co is 1.28 times less risky than Dr Peng. It trades about 0.05 of its potential returns per unit of risk. Dr Peng Telecom is currently generating about -0.02 per unit of risk. If you would invest  460.00  in Bus Online Co on December 24, 2024 and sell it today you would earn a total of  26.00  from holding Bus Online Co or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Bus Online Co  vs.  Dr Peng Telecom

Bus Online

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bus Online Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bus Online may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dr Peng Telecom

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bus Online and Dr Peng

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

The idea behind Bus Online Co and Dr Peng Telecom 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.