Correlation Between Changchun and Jiangsu Bioperfectus

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

By analyzing existing cross correlation between Changchun UP Optotech and Jiangsu Bioperfectus Technologies, you can compare the effects of market volatilities on Changchun and Jiangsu Bioperfectus 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 Changchun with a short position of Jiangsu Bioperfectus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and Jiangsu Bioperfectus.

Diversification Opportunities for Changchun and Jiangsu Bioperfectus

0.61

Correlation Coefficient

Changchun  Jiangsu Bioperfectus

Poor diversification

The 3 months correlation between Changchun and Jiangsu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech and Jiangsu Bioperfectus Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Bioperfectus and Changchun 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 Changchun UP Optotech are associated (or correlated) with Jiangsu Bioperfectus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Bioperfectus has no effect on the direction of Changchun i.e., Changchun and Jiangsu Bioperfectus go up and down completely randomly.

Pair Corralation between Changchun and Jiangsu Bioperfectus

Assuming the 90 days trading horizon Changchun UP Optotech is not expected to generate positive returns. Moreover, Changchun is 1.45 times more volatile than Jiangsu Bioperfectus Technologies. It trades away all of its potential returns to assume current level of volatility. Jiangsu Bioperfectus Technologies is currently generating about -0.05 per unit of risk. If you would invest  3,958  in Changchun UP Optotech on October 22, 2024 and sell it today you would lose (24.00) from holding Changchun UP Optotech or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Changchun UP Optotech  vs.  Jiangsu Bioperfectus Technolog

Changchun UP Optotech

Risk-Adjusted Performance

3 of 100

Insignificant

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

Jiangsu Bioperfectus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Bioperfectus Technologies 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 Changchun and Jiangsu Bioperfectus

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

The idea behind Changchun UP Optotech and Jiangsu Bioperfectus 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.