Correlation Between Bosera CMSK and Nanjing Putian

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

Diversification Opportunities for Bosera CMSK and Nanjing Putian

-0.23

Correlation Coefficient

Bosera CMSK  Nanjing Putian

Very good diversification

The 3 months correlation between Bosera and Nanjing is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bosera CMSK Industrial and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec 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 Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Bosera CMSK i.e., Bosera CMSK and Nanjing Putian go up and down completely randomly.

Pair Corralation between Bosera CMSK and Nanjing Putian

Assuming the 90 days trading horizon Bosera CMSK is expected to generate 5.39 times less return on investment than Nanjing Putian. But when comparing it to its historical volatility, Bosera CMSK Industrial is 6.67 times less risky than Nanjing Putian. It trades about 0.14 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Nanjing Putian Telecommunications on October 10, 2024 and sell it today you would earn a total of  80.00  from holding Nanjing Putian Telecommunications or generate 29.63% return on investment over 90 days.

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

Bosera CMSK Industrial  vs.  Nanjing Putian Telecommunicati

Bosera CMSK Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bosera CMSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nanjing Putian Telec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Putian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bosera CMSK and Nanjing Putian

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

The idea behind Bosera CMSK Industrial and Nanjing Putian Telecommunications 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.

Check out your portfolio center.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.