Correlation Between Beijing Sanyuan and HanS Laser

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

By analyzing existing cross correlation between Beijing Sanyuan Foods and HanS Laser Tech, you can compare the effects of market volatilities on Beijing Sanyuan and HanS Laser 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 Beijing Sanyuan with a short position of HanS Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Sanyuan and HanS Laser.

Diversification Opportunities for Beijing Sanyuan and HanS Laser

0.5

Correlation Coefficient

Beijing Sanyuan  HanS Laser

Very weak diversification

The 3 months correlation between Beijing and HanS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Sanyuan Foods and HanS Laser Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HanS Laser Tech and Beijing Sanyuan 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 Beijing Sanyuan Foods are associated (or correlated) with HanS Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HanS Laser Tech has no effect on the direction of Beijing Sanyuan i.e., Beijing Sanyuan and HanS Laser go up and down completely randomly.

Pair Corralation between Beijing Sanyuan and HanS Laser

Assuming the 90 days trading horizon Beijing Sanyuan Foods is expected to under-perform the HanS Laser. But the stock apears to be less risky and, when comparing its historical volatility, Beijing Sanyuan Foods is 1.38 times less risky than HanS Laser. The stock trades about 0.0 of its potential returns per unit of risk. The HanS Laser Tech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,540  in HanS Laser Tech on October 3, 2024 and sell it today you would lose (40.00) from holding HanS Laser Tech or give up 1.57% of portfolio value over 90 days.

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

Beijing Sanyuan Foods  vs.  HanS Laser Tech

Beijing Sanyuan Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

HanS Laser Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijing Sanyuan and HanS Laser

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

The idea behind Beijing Sanyuan Foods and HanS Laser Tech 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.