Correlation Between Pengxin International and Biwin Storage

Can any of the company-specific risk be diversified away by investing in both Pengxin International and Biwin Storage 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 Pengxin International and Biwin Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pengxin International Mining and Biwin Storage Technology, you can compare the effects of market volatilities on Pengxin International and Biwin Storage 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 Pengxin International with a short position of Biwin Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengxin International and Biwin Storage.

Diversification Opportunities for Pengxin International and Biwin Storage

0.48

Correlation Coefficient

Pengxin International  Biwin Storage

Very weak diversification

The 3 months correlation between Pengxin and Biwin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pengxin International Mining and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology and Pengxin International 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 Pengxin International Mining are associated (or correlated) with Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Pengxin International i.e., Pengxin International and Biwin Storage go up and down completely randomly.

Pair Corralation between Pengxin International and Biwin Storage

Assuming the 90 days trading horizon Pengxin International is expected to generate 8.74 times less return on investment than Biwin Storage. In addition to that, Pengxin International is 1.1 times more volatile than Biwin Storage Technology. It trades about 0.01 of its total potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.13 per unit of volatility. If you would invest  5,880  in Biwin Storage Technology on December 5, 2024 and sell it today you would earn a total of  1,437  from holding Biwin Storage Technology or generate 24.44% return on investment over 90 days.

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

Pengxin International Mining  vs.  Biwin Storage Technology

Pengxin International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pengxin International Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pengxin International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biwin Storage Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biwin Storage Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biwin Storage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pengxin International and Biwin Storage

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

The idea behind Pengxin International Mining and Biwin Storage Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.