Correlation Between Shandong Publishing and BrightGene Bio

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Can any of the company-specific risk be diversified away by investing in both Shandong Publishing and BrightGene Bio 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 Shandong Publishing and BrightGene Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shandong Publishing Media and BrightGene Bio Medical, you can compare the effects of market volatilities on Shandong Publishing and BrightGene Bio 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 Shandong Publishing with a short position of BrightGene Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Publishing and BrightGene Bio.

Diversification Opportunities for Shandong Publishing and BrightGene Bio

ShandongBrightGeneDiversified AwayShandongBrightGeneDiversified Away100%
0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Shandong and BrightGene is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Publishing Media and BrightGene Bio Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightGene Bio Medical and Shandong Publishing 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 Shandong Publishing Media are associated (or correlated) with BrightGene Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightGene Bio Medical has no effect on the direction of Shandong Publishing i.e., Shandong Publishing and BrightGene Bio go up and down completely randomly.

Pair Corralation between Shandong Publishing and BrightGene Bio

Assuming the 90 days trading horizon Shandong Publishing is expected to generate 1.28 times less return on investment than BrightGene Bio. But when comparing it to its historical volatility, Shandong Publishing Media is 1.08 times less risky than BrightGene Bio. It trades about 0.03 of its potential returns per unit of risk. BrightGene Bio Medical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,165  in BrightGene Bio Medical on November 24, 2024 and sell it today you would earn a total of  100.00  from holding BrightGene Bio Medical or generate 3.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Shandong Publishing Media  vs.  BrightGene Bio Medical

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.15601019 688166
       Timeline  
Shandong Publishing Media 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Publishing Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shandong Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1010.51111.51212.5
BrightGene Bio Medical 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BrightGene Bio Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BrightGene Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb293031323334

Shandong Publishing and BrightGene Bio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.62-2.71-1.8-0.89-0.010.891.82.73.61 0.0400.0450.0500.0550.0600.0650.0700.075
JavaScript chart by amCharts 3.21.15601019 688166
       Returns  

Pair Trading with Shandong Publishing and BrightGene Bio

The main advantage of trading using opposite Shandong Publishing and BrightGene Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Publishing position performs unexpectedly, BrightGene Bio 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 BrightGene Bio will offset losses from the drop in BrightGene Bio's long position.
The idea behind Shandong Publishing Media and BrightGene Bio Medical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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