Correlation Between Bus Online and Anji Microelectronics

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

Diversification Opportunities for Bus Online and Anji Microelectronics

0.48

Correlation Coefficient

Bus Online  Anji Microelectronics

Very weak diversification

The 3 months correlation between Bus and Anji is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Anji Microelectronics Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anji Microelectronics 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 Anji Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anji Microelectronics has no effect on the direction of Bus Online i.e., Bus Online and Anji Microelectronics go up and down completely randomly.

Pair Corralation between Bus Online and Anji Microelectronics

Assuming the 90 days trading horizon Bus Online Co is expected to under-perform the Anji Microelectronics. In addition to that, Bus Online is 1.13 times more volatile than Anji Microelectronics Tech. It trades about -0.01 of its total potential returns per unit of risk. Anji Microelectronics Tech is currently generating about 0.11 per unit of volatility. If you would invest  14,470  in Anji Microelectronics Tech on December 30, 2024 and sell it today you would earn a total of  1,996  from holding Anji Microelectronics Tech or generate 13.79% return on investment over 90 days.

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

Bus Online Co  vs.  Anji Microelectronics Tech

Bus Online

Risk-Adjusted Performance

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.

Anji Microelectronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anji Microelectronics Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anji Microelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bus Online and Anji Microelectronics

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

The idea behind Bus Online Co and Anji Microelectronics Tech 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 Anywhere module to track or share privately all of your investments from the convenience of any device.