Correlation Between RPBio and Bosung Power

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

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

Diversification Opportunities for RPBio and Bosung Power

0.81

Correlation Coefficient

RPBio  Bosung Power

Very poor diversification

The 3 months correlation between RPBio and Bosung is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and RPBio 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 RPBio Inc are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of RPBio i.e., RPBio and Bosung Power go up and down completely randomly.

Pair Corralation between RPBio and Bosung Power

Assuming the 90 days trading horizon RPBio is expected to generate 5.49 times less return on investment than Bosung Power. But when comparing it to its historical volatility, RPBio Inc is 1.15 times less risky than Bosung Power. It trades about 0.08 of its potential returns per unit of risk. Bosung Power Technology is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  261,500  in Bosung Power Technology on October 24, 2024 and sell it today you would earn a total of  39,500  from holding Bosung Power Technology or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

RPBio Inc  vs.  Bosung Power Technology

RPBio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPBio Inc 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bosung Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RPBio and Bosung Power

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

The idea behind RPBio Inc and Bosung Power Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.