Correlation Between Bin Chuan and Waffer Technology

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

Diversification Opportunities for Bin Chuan and Waffer Technology

-0.24

Correlation Coefficient

Bin Chuan  Waffer Technology

Very good diversification

The 3 months correlation between Bin and Waffer is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Waffer Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waffer Technology Corp 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 Waffer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waffer Technology Corp has no effect on the direction of Bin Chuan i.e., Bin Chuan and Waffer Technology go up and down completely randomly.

Pair Corralation between Bin Chuan and Waffer Technology

Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 2.57 times more return on investment than Waffer Technology. However, Bin Chuan is 2.57 times more volatile than Waffer Technology Corp. It trades about 0.16 of its potential returns per unit of risk. Waffer Technology Corp is currently generating about -0.18 per unit of risk. If you would invest  5,320  in Bin Chuan Enterprise on December 27, 2024 and sell it today you would earn a total of  2,520  from holding Bin Chuan Enterprise or generate 47.37% return on investment over 90 days.

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

Bin Chuan Enterprise  vs.  Waffer Technology Corp

Bin Chuan Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 12 (%) 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.

Waffer Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waffer Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bin Chuan and Waffer Technology

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

The idea behind Bin Chuan Enterprise and Waffer Technology Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.