Correlation Between Hubei Geoway and Bomesc Offshore

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

By analyzing existing cross correlation between Hubei Geoway Investment and Bomesc Offshore Engineering, you can compare the effects of market volatilities on Hubei Geoway and Bomesc Offshore 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 Hubei Geoway with a short position of Bomesc Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Geoway and Bomesc Offshore.

Diversification Opportunities for Hubei Geoway and Bomesc Offshore

0.53

Correlation Coefficient

Hubei Geoway  Bomesc Offshore

Very weak diversification

The 3 months correlation between Hubei and Bomesc is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Geoway Investment and Bomesc Offshore Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bomesc Offshore Engi and Hubei Geoway 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 Hubei Geoway Investment are associated (or correlated) with Bomesc Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bomesc Offshore Engi has no effect on the direction of Hubei Geoway i.e., Hubei Geoway and Bomesc Offshore go up and down completely randomly.

Pair Corralation between Hubei Geoway and Bomesc Offshore

Assuming the 90 days trading horizon Hubei Geoway Investment is expected to generate 2.13 times more return on investment than Bomesc Offshore. However, Hubei Geoway is 2.13 times more volatile than Bomesc Offshore Engineering. It trades about 0.07 of its potential returns per unit of risk. Bomesc Offshore Engineering is currently generating about -0.07 per unit of risk. If you would invest  139.00  in Hubei Geoway Investment on October 6, 2024 and sell it today you would earn a total of  11.00  from holding Hubei Geoway Investment or generate 7.91% return on investment over 90 days.

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

Hubei Geoway Investment  vs.  Bomesc Offshore Engineering

Hubei Geoway Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bomesc Offshore Engi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bomesc Offshore Engineering 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 Hubei Geoway and Bomesc Offshore

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

The idea behind Hubei Geoway Investment and Bomesc Offshore Engineering 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..