Correlation Between Chenming Mold and AOPEN

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

By analyzing existing cross correlation between Chenming Mold Industrial and AOPEN Inc, you can compare the effects of market volatilities on Chenming Mold and AOPEN 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 Chenming Mold with a short position of AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and AOPEN.

Diversification Opportunities for Chenming Mold and AOPEN

-0.52

Correlation Coefficient

Chenming Mold  AOPEN

Excellent diversification

The 3 months correlation between Chenming and AOPEN is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of Chenming Mold i.e., Chenming Mold and AOPEN go up and down completely randomly.

Pair Corralation between Chenming Mold and AOPEN

Assuming the 90 days trading horizon Chenming Mold Industrial is expected to generate 2.3 times more return on investment than AOPEN. However, Chenming Mold is 2.3 times more volatile than AOPEN Inc. It trades about -0.07 of its potential returns per unit of risk. AOPEN Inc is currently generating about -0.34 per unit of risk. If you would invest  15,400  in Chenming Mold Industrial on September 16, 2024 and sell it today you would lose (900.00) from holding Chenming Mold Industrial or give up 5.84% of portfolio value over 90 days.

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

Chenming Mold Industrial  vs.  AOPEN Inc

Chenming Mold Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

AOPEN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AOPEN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Chenming Mold and AOPEN

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

The idea behind Chenming Mold Industrial and AOPEN Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.