Correlation Between Bin Chuan and Asmedia Technology

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

By analyzing existing cross correlation between Bin Chuan Enterprise and Asmedia Technology, you can compare the effects of market volatilities on Bin Chuan and Asmedia Technology 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 Bin Chuan with a short position of Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Asmedia Technology.

Diversification Opportunities for Bin Chuan and Asmedia Technology

0.49

Correlation Coefficient

Bin Chuan  Asmedia Technology

Very weak diversification

The 3 months correlation between Bin and Asmedia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and Bin Chuan 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 Bin Chuan Enterprise are associated (or correlated) with Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Bin Chuan i.e., Bin Chuan and Asmedia Technology go up and down completely randomly.

Pair Corralation between Bin Chuan and Asmedia Technology

Assuming the 90 days trading horizon Bin Chuan is expected to generate 1.12 times less return on investment than Asmedia Technology. In addition to that, Bin Chuan is 1.29 times more volatile than Asmedia Technology. It trades about 0.11 of its total potential returns per unit of risk. Asmedia Technology is currently generating about 0.16 per unit of volatility. If you would invest  154,000  in Asmedia Technology on October 9, 2024 and sell it today you would earn a total of  52,500  from holding Asmedia Technology or generate 34.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Bin Chuan Enterprise  vs.  Asmedia Technology

Bin Chuan Enterprise

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bin Chuan showed solid returns over the last few months and may actually be approaching a breakup point.

Asmedia Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asmedia Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asmedia Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bin Chuan and Asmedia Technology

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

The idea behind Bin Chuan Enterprise and Asmedia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.