Correlation Between Xinjiang Baodi and Bomesc Offshore

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

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

Diversification Opportunities for Xinjiang Baodi and Bomesc Offshore

0.95

Correlation Coefficient

Xinjiang Baodi  Bomesc Offshore

Almost no diversification

The 3 months correlation between Xinjiang and Bomesc is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining 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 Xinjiang Baodi 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 Xinjiang Baodi Mining 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 Xinjiang Baodi i.e., Xinjiang Baodi and Bomesc Offshore go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Bomesc Offshore

Assuming the 90 days trading horizon Xinjiang Baodi is expected to generate 1.11 times less return on investment than Bomesc Offshore. In addition to that, Xinjiang Baodi is 1.01 times more volatile than Bomesc Offshore Engineering. It trades about 0.18 of its total potential returns per unit of risk. Bomesc Offshore Engineering is currently generating about 0.2 per unit of volatility. If you would invest  954.00  in Bomesc Offshore Engineering on September 13, 2024 and sell it today you would earn a total of  329.00  from holding Bomesc Offshore Engineering or generate 34.49% return on investment over 90 days.

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

Xinjiang Baodi Mining  vs.  Bomesc Offshore Engineering

Xinjiang Baodi Mining

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi sustained solid returns over the last few months and may actually be approaching a breakup point.

Bomesc Offshore Engi

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bomesc Offshore Engineering are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bomesc Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinjiang Baodi and Bomesc Offshore

The main advantage of trading using opposite Xinjiang Baodi and Bomesc Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Baodi 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 Xinjiang Baodi Mining 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.