Correlation Between China Minsheng and Bus Online

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

By analyzing existing cross correlation between China Minsheng Banking and Bus Online Co, you can compare the effects of market volatilities on China Minsheng and Bus Online 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 China Minsheng with a short position of Bus Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Minsheng and Bus Online.

Diversification Opportunities for China Minsheng and Bus Online

-0.09

Correlation Coefficient

China Minsheng  Bus Online

Good diversification

The 3 months correlation between China and Bus is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Minsheng Banking and Bus Online Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bus Online and China Minsheng 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 China Minsheng Banking are associated (or correlated) with Bus Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bus Online has no effect on the direction of China Minsheng i.e., China Minsheng and Bus Online go up and down completely randomly.

Pair Corralation between China Minsheng and Bus Online

Assuming the 90 days trading horizon China Minsheng Banking is expected to generate 0.45 times more return on investment than Bus Online. However, China Minsheng Banking is 2.22 times less risky than Bus Online. It trades about 0.07 of its potential returns per unit of risk. Bus Online Co is currently generating about -0.05 per unit of risk. If you would invest  388.00  in China Minsheng Banking on October 26, 2024 and sell it today you would earn a total of  27.00  from holding China Minsheng Banking or generate 6.96% return on investment over 90 days.

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

China Minsheng Banking  vs.  Bus Online Co

China Minsheng Banking

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Minsheng Banking are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Minsheng may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bus Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bus Online Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China Minsheng and Bus Online

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

The idea behind China Minsheng Banking and Bus Online Co 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.