Correlation Between Bosera CMSK and Eternal Asia

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

By analyzing existing cross correlation between Bosera CMSK Industrial and Eternal Asia Supply, you can compare the effects of market volatilities on Bosera CMSK and Eternal Asia 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 Bosera CMSK with a short position of Eternal Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosera CMSK and Eternal Asia.

Diversification Opportunities for Bosera CMSK and Eternal Asia

-0.72

Correlation Coefficient

Bosera CMSK  Eternal Asia

Pay attention - limited upside

The 3 months correlation between Bosera and Eternal is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bosera CMSK Industrial and Eternal Asia Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Asia Supply and Bosera CMSK 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 Bosera CMSK Industrial are associated (or correlated) with Eternal Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Asia Supply has no effect on the direction of Bosera CMSK i.e., Bosera CMSK and Eternal Asia go up and down completely randomly.

Pair Corralation between Bosera CMSK and Eternal Asia

Assuming the 90 days trading horizon Bosera CMSK Industrial is expected to generate 0.23 times more return on investment than Eternal Asia. However, Bosera CMSK Industrial is 4.29 times less risky than Eternal Asia. It trades about 0.2 of its potential returns per unit of risk. Eternal Asia Supply is currently generating about 0.04 per unit of risk. If you would invest  195.00  in Bosera CMSK Industrial on October 22, 2024 and sell it today you would earn a total of  22.00  from holding Bosera CMSK Industrial or generate 11.28% return on investment over 90 days.

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

Bosera CMSK Industrial  vs.  Eternal Asia Supply

Bosera CMSK Industrial

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosera CMSK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eternal Asia Supply

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Bosera CMSK and Eternal Asia

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

The idea behind Bosera CMSK Industrial and Eternal Asia Supply 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.