Correlation Between Universal Scientific and Guangzhou Boji

Can any of the company-specific risk be diversified away by investing in both Universal Scientific and Guangzhou Boji 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 Universal Scientific and Guangzhou Boji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Scientific Industrial and Guangzhou Boji Medical, you can compare the effects of market volatilities on Universal Scientific and Guangzhou Boji 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 Universal Scientific with a short position of Guangzhou Boji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Scientific and Guangzhou Boji.

Diversification Opportunities for Universal Scientific and Guangzhou Boji

0.23

Correlation Coefficient

Universal Scientific  Guangzhou Boji

Modest diversification

The 3 months correlation between Universal and Guangzhou is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Universal Scientific Industria and Guangzhou Boji Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Boji Medical and Universal Scientific 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 Universal Scientific Industrial are associated (or correlated) with Guangzhou Boji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Boji Medical has no effect on the direction of Universal Scientific i.e., Universal Scientific and Guangzhou Boji go up and down completely randomly.

Pair Corralation between Universal Scientific and Guangzhou Boji

Assuming the 90 days trading horizon Universal Scientific is expected to generate 1.77 times less return on investment than Guangzhou Boji. But when comparing it to its historical volatility, Universal Scientific Industrial is 1.17 times less risky than Guangzhou Boji. It trades about 0.04 of its potential returns per unit of risk. Guangzhou Boji Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  739.00  in Guangzhou Boji Medical on October 4, 2024 and sell it today you would earn a total of  134.00  from holding Guangzhou Boji Medical or generate 18.13% return on investment over 90 days.

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

Universal Scientific Industria  vs.  Guangzhou Boji Medical

Universal Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Scientific Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Universal Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guangzhou Boji Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Boji Medical 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 Universal Scientific and Guangzhou Boji

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

The idea behind Universal Scientific Industrial and Guangzhou Boji 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.