Correlation Between Cloud Live and Bomin Electronics

Can any of the company-specific risk be diversified away by investing in both Cloud Live and Bomin Electronics 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 Cloud Live and Bomin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cloud Live Technology and Bomin Electronics Co, you can compare the effects of market volatilities on Cloud Live and Bomin Electronics 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 Cloud Live with a short position of Bomin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Live and Bomin Electronics.

Diversification Opportunities for Cloud Live and Bomin Electronics

0.48

Correlation Coefficient

Cloud Live  Bomin Electronics

Very weak diversification

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

Pair Corralation between Cloud Live and Bomin Electronics

Assuming the 90 days trading horizon Cloud Live Technology is expected to under-perform the Bomin Electronics. In addition to that, Cloud Live is 1.27 times more volatile than Bomin Electronics Co. It trades about -0.29 of its total potential returns per unit of risk. Bomin Electronics Co is currently generating about -0.17 per unit of volatility. If you would invest  921.00  in Bomin Electronics Co on October 21, 2024 and sell it today you would lose (128.00) from holding Bomin Electronics Co or give up 13.9% of portfolio value over 90 days.

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

Cloud Live Technology  vs.  Bomin Electronics Co

Cloud Live Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bomin Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bomin Electronics 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 Cloud Live and Bomin Electronics

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

The idea behind Cloud Live Technology and Bomin Electronics 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.