Correlation Between Motorcar Parts and CanSino Biologics

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

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

Diversification Opportunities for Motorcar Parts and CanSino Biologics

0.87

Correlation Coefficient

Motorcar Parts  CanSino Biologics

Very poor diversification

The 3 months correlation between Motorcar and CanSino is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Motorcar Parts of and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Motorcar Parts 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 Motorcar Parts of are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Motorcar Parts i.e., Motorcar Parts and CanSino Biologics go up and down completely randomly.

Pair Corralation between Motorcar Parts and CanSino Biologics

Assuming the 90 days horizon Motorcar Parts of is expected to generate 1.25 times more return on investment than CanSino Biologics. However, Motorcar Parts is 1.25 times more volatile than CanSino Biologics. It trades about 0.09 of its potential returns per unit of risk. CanSino Biologics is currently generating about 0.05 per unit of risk. If you would invest  780.00  in Motorcar Parts of on December 24, 2024 and sell it today you would earn a total of  170.00  from holding Motorcar Parts of or generate 21.79% return on investment over 90 days.

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

Motorcar Parts of  vs.  CanSino Biologics

Motorcar Parts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motorcar Parts of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Motorcar Parts reported solid returns over the last few months and may actually be approaching a breakup point.

CanSino Biologics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CanSino Biologics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Motorcar Parts and CanSino Biologics

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

The idea behind Motorcar Parts of and CanSino Biologics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.