Correlation Between Bin Chuan and Voltronic Power

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

Diversification Opportunities for Bin Chuan and Voltronic Power

-0.68

Correlation Coefficient

Bin Chuan  Voltronic Power

Excellent diversification

The 3 months correlation between Bin and Voltronic is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech 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 Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Bin Chuan i.e., Bin Chuan and Voltronic Power go up and down completely randomly.

Pair Corralation between Bin Chuan and Voltronic Power

Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 0.83 times more return on investment than Voltronic Power. However, Bin Chuan Enterprise is 1.2 times less risky than Voltronic Power. It trades about 0.11 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about 0.03 per unit of risk. If you would invest  2,020  in Bin Chuan Enterprise on September 18, 2024 and sell it today you would earn a total of  3,690  from holding Bin Chuan Enterprise or generate 182.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Bin Chuan Enterprise  vs.  Voltronic Power Technology

Bin Chuan Enterprise

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 22 (%) 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.

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Voltronic Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bin Chuan and Voltronic Power

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

The idea behind Bin Chuan Enterprise and Voltronic Power 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.