Correlation Between Shenzhen Bioeasy and NBTM New

Can any of the company-specific risk be diversified away by investing in both Shenzhen Bioeasy and NBTM New 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 NBTM New 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 NBTM New Materials, you can compare the effects of market volatilities on Shenzhen Bioeasy and NBTM New 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 NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bioeasy and NBTM New.

Diversification Opportunities for Shenzhen Bioeasy and NBTM New

0.16

Correlation Coefficient

Shenzhen Bioeasy  NBTM New

Average diversification

The 3 months correlation between Shenzhen and NBTM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials 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 NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and NBTM New go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and NBTM New

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to generate 1.32 times more return on investment than NBTM New. However, Shenzhen Bioeasy is 1.32 times more volatile than NBTM New Materials. It trades about 0.08 of its potential returns per unit of risk. NBTM New Materials is currently generating about 0.06 per unit of risk. If you would invest  605.00  in Shenzhen Bioeasy Biotechnology on October 3, 2024 and sell it today you would earn a total of  252.00  from holding Shenzhen Bioeasy Biotechnology or generate 41.65% return on investment over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  NBTM New Materials

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Bioeasy Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

NBTM New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBTM New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NBTM New 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 NBTM New

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

The idea behind Shenzhen Bioeasy Biotechnology and NBTM New Materials 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.