Correlation Between Bus Online and Chison Medical

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

Diversification Opportunities for Bus Online and Chison Medical

0.83

Correlation Coefficient

Bus Online  Chison Medical

Very poor diversification

The 3 months correlation between Bus and Chison is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn 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 Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Bus Online i.e., Bus Online and Chison Medical go up and down completely randomly.

Pair Corralation between Bus Online and Chison Medical

Assuming the 90 days trading horizon Bus Online Co is expected to under-perform the Chison Medical. But the stock apears to be less risky and, when comparing its historical volatility, Bus Online Co is 1.05 times less risky than Chison Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Chison Medical Technologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,843  in Chison Medical Technologies on October 5, 2024 and sell it today you would lose (1,434) from holding Chison Medical Technologies or give up 37.31% 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.  Chison Medical Technologies

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 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.

Chison Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chison Medical Technologies 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bus Online and Chison Medical

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

The idea behind Bus Online Co and Chison Medical Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.