Correlation Between Bosera CMSK and Guizhou Chanhen

Can any of the company-specific risk be diversified away by investing in both Bosera CMSK and Guizhou Chanhen 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 Guizhou Chanhen 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 Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Bosera CMSK and Guizhou Chanhen 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 Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosera CMSK and Guizhou Chanhen.

Diversification Opportunities for Bosera CMSK and Guizhou Chanhen

-0.43

Correlation Coefficient

Bosera CMSK  Guizhou Chanhen

Very good diversification

The 3 months correlation between Bosera and Guizhou is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bosera CMSK Industrial and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical 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 Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Bosera CMSK i.e., Bosera CMSK and Guizhou Chanhen go up and down completely randomly.

Pair Corralation between Bosera CMSK and Guizhou Chanhen

Assuming the 90 days trading horizon Bosera CMSK Industrial is expected to generate 0.67 times more return on investment than Guizhou Chanhen. However, Bosera CMSK Industrial is 1.48 times less risky than Guizhou Chanhen. It trades about 0.22 of its potential returns per unit of risk. Guizhou Chanhen Chemical is currently generating about -0.02 per unit of risk. If you would invest  201.00  in Bosera CMSK Industrial on December 25, 2024 and sell it today you would earn a total of  32.00  from holding Bosera CMSK Industrial or generate 15.92% return on investment over 90 days.

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

Bosera CMSK Industrial  vs.  Guizhou Chanhen Chemical

Bosera CMSK Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosera CMSK sustained solid returns over the last few months and may actually be approaching a breakup point.

Guizhou Chanhen Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guizhou Chanhen Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guizhou Chanhen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bosera CMSK and Guizhou Chanhen

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

The idea behind Bosera CMSK Industrial and Guizhou Chanhen Chemical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.