Correlation Between Bomesc Offshore and Jiangxi Selon

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

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

Diversification Opportunities for Bomesc Offshore and Jiangxi Selon

-0.41

Correlation Coefficient

Bomesc Offshore  Jiangxi Selon

Very good diversification

The 3 months correlation between Bomesc and Jiangxi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Jiangxi Selon Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Selon Industrial and Bomesc Offshore 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 Bomesc Offshore Engineering are associated (or correlated) with Jiangxi Selon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Selon Industrial has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Jiangxi Selon go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Jiangxi Selon

Assuming the 90 days trading horizon Bomesc Offshore Engineering is expected to generate 0.89 times more return on investment than Jiangxi Selon. However, Bomesc Offshore Engineering is 1.13 times less risky than Jiangxi Selon. It trades about 0.08 of its potential returns per unit of risk. Jiangxi Selon Industrial is currently generating about 0.06 per unit of risk. If you would invest  1,268  in Bomesc Offshore Engineering on December 3, 2024 and sell it today you would earn a total of  93.00  from holding Bomesc Offshore Engineering or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Bomesc Offshore Engineering  vs.  Jiangxi Selon Industrial

Bomesc Offshore Engi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bomesc Offshore Engineering are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bomesc Offshore may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jiangxi Selon Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Selon Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Selon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bomesc Offshore and Jiangxi Selon

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

The idea behind Bomesc Offshore Engineering and Jiangxi Selon Industrial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.