Correlation Between Chunbo and Ecopro BM

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

By analyzing existing cross correlation between Chunbo Co and Ecopro BM Co, you can compare the effects of market volatilities on Chunbo and Ecopro BM 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 Chunbo with a short position of Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunbo and Ecopro BM.

Diversification Opportunities for Chunbo and Ecopro BM

0.94

Correlation Coefficient

Chunbo  Ecopro BM

Almost no diversification

The 3 months correlation between Chunbo and Ecopro is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Chunbo Co and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM and Chunbo 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 Chunbo Co are associated (or correlated) with Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of Chunbo i.e., Chunbo and Ecopro BM go up and down completely randomly.

Pair Corralation between Chunbo and Ecopro BM

Assuming the 90 days trading horizon Chunbo Co is expected to under-perform the Ecopro BM. But the stock apears to be less risky and, when comparing its historical volatility, Chunbo Co is 1.01 times less risky than Ecopro BM. The stock trades about -0.16 of its potential returns per unit of risk. The Ecopro BM Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  17,450,000  in Ecopro BM Co on September 3, 2024 and sell it today you would lose (3,930,000) from holding Ecopro BM Co or give up 22.52% of portfolio value over 90 days.

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

Chunbo Co  vs.  Ecopro BM Co

Chunbo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chunbo Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ecopro BM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecopro BM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chunbo and Ecopro BM

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

The idea behind Chunbo Co and Ecopro BM Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.