Correlation Between ButOne Information and Bomin Electronics

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

By analyzing existing cross correlation between ButOne Information Corp and Bomin Electronics Co, you can compare the effects of market volatilities on ButOne Information and Bomin Electronics 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 ButOne Information with a short position of Bomin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ButOne Information and Bomin Electronics.

Diversification Opportunities for ButOne Information and Bomin Electronics

0.73

Correlation Coefficient

ButOne Information  Bomin Electronics

Poor diversification

The 3 months correlation between ButOne and Bomin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ButOne Information Corp and Bomin Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bomin Electronics and ButOne Information 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 ButOne Information Corp are associated (or correlated) with Bomin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bomin Electronics has no effect on the direction of ButOne Information i.e., ButOne Information and Bomin Electronics go up and down completely randomly.

Pair Corralation between ButOne Information and Bomin Electronics

Assuming the 90 days trading horizon ButOne Information Corp is expected to under-perform the Bomin Electronics. In addition to that, ButOne Information is 1.62 times more volatile than Bomin Electronics Co. It trades about -0.08 of its total potential returns per unit of risk. Bomin Electronics Co is currently generating about 0.12 per unit of volatility. If you would invest  865.00  in Bomin Electronics Co on September 29, 2024 and sell it today you would earn a total of  47.00  from holding Bomin Electronics Co or generate 5.43% return on investment over 90 days.

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

ButOne Information Corp  vs.  Bomin Electronics Co

ButOne Information Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ButOne Information Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ButOne Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Bomin Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bomin Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bomin Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ButOne Information and Bomin Electronics

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

The idea behind ButOne Information Corp and Bomin Electronics 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..