Correlation Between Bus Online and Hangzhou Arcvideo

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

Diversification Opportunities for Bus Online and Hangzhou Arcvideo

0.87

Correlation Coefficient

Bus Online  Hangzhou Arcvideo

Very poor diversification

The 3 months correlation between Bus and Hangzhou is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Hangzhou Arcvideo Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Arcvideo 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 Hangzhou Arcvideo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Arcvideo has no effect on the direction of Bus Online i.e., Bus Online and Hangzhou Arcvideo go up and down completely randomly.

Pair Corralation between Bus Online and Hangzhou Arcvideo

Assuming the 90 days trading horizon Bus Online Co is expected to generate 0.79 times more return on investment than Hangzhou Arcvideo. However, Bus Online Co is 1.27 times less risky than Hangzhou Arcvideo. It trades about 0.0 of its potential returns per unit of risk. Hangzhou Arcvideo Technology is currently generating about -0.03 per unit of risk. If you would invest  455.00  in Bus Online Co on October 22, 2024 and sell it today you would lose (15.00) from holding Bus Online Co or give up 3.3% of portfolio value over 90 days.

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

Bus Online Co  vs.  Hangzhou Arcvideo Technology

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.

Hangzhou Arcvideo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Arcvideo Technology 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 Hangzhou Arcvideo

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

The idea behind Bus Online Co and Hangzhou Arcvideo Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.