Correlation Between Bosera CMSK and Ye Chiu

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

Diversification Opportunities for Bosera CMSK and Ye Chiu

-0.5

Correlation Coefficient

Bosera CMSK  Ye Chiu

Very good diversification

The 3 months correlation between Bosera and 601388 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bosera CMSK Industrial and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Bosera CMSK i.e., Bosera CMSK and Ye Chiu go up and down completely randomly.

Pair Corralation between Bosera CMSK and Ye Chiu

Assuming the 90 days trading horizon Bosera CMSK Industrial is expected to generate 0.71 times more return on investment than Ye Chiu. However, Bosera CMSK Industrial is 1.41 times less risky than Ye Chiu. It trades about 0.23 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about 0.04 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  33.00  from holding Bosera CMSK Industrial or generate 16.42% 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.  Ye Chiu Metal

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 18 (%) 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.

Ye Chiu Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ye Chiu 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 Ye Chiu

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

The idea behind Bosera CMSK Industrial and Ye Chiu Metal 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.