Correlation Between Shenzhen Bioeasy and By Health

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

By analyzing existing cross correlation between Shenzhen Bioeasy Biotechnology and By health, you can compare the effects of market volatilities on Shenzhen Bioeasy and By Health 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 Shenzhen Bioeasy with a short position of By Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bioeasy and By Health.

Diversification Opportunities for Shenzhen Bioeasy and By Health

0.84

Correlation Coefficient

Shenzhen Bioeasy  By Health

Very poor diversification

The 3 months correlation between Shenzhen and 300146 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and By health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on By health and Shenzhen Bioeasy 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 Shenzhen Bioeasy Biotechnology are associated (or correlated) with By Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of By health has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and By Health go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and By Health

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to generate 2.1 times more return on investment than By Health. However, Shenzhen Bioeasy is 2.1 times more volatile than By health. It trades about 0.02 of its potential returns per unit of risk. By health is currently generating about -0.05 per unit of risk. If you would invest  875.00  in Shenzhen Bioeasy Biotechnology on December 25, 2024 and sell it today you would earn a total of  9.00  from holding Shenzhen Bioeasy Biotechnology or generate 1.03% return on investment over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  By health

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Bioeasy Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Bioeasy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

By health

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shenzhen Bioeasy and By Health

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

The idea behind Shenzhen Bioeasy Biotechnology and By health 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.