Correlation Between Bomesc Offshore and Sublime China

Can any of the company-specific risk be diversified away by investing in both Bomesc Offshore and Sublime China 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 Sublime China 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 Sublime China Information, you can compare the effects of market volatilities on Bomesc Offshore and Sublime China 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 Sublime China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bomesc Offshore and Sublime China.

Diversification Opportunities for Bomesc Offshore and Sublime China

0.61

Correlation Coefficient

Bomesc Offshore  Sublime China

Poor diversification

The 3 months correlation between Bomesc and Sublime is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Sublime China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sublime China Information 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 Sublime China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sublime China Information has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Sublime China go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Sublime China

Assuming the 90 days trading horizon Bomesc Offshore is expected to generate 3.92 times less return on investment than Sublime China. But when comparing it to its historical volatility, Bomesc Offshore Engineering is 2.38 times less risky than Sublime China. It trades about 0.0 of its potential returns per unit of risk. Sublime China Information is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,120  in Sublime China Information on October 9, 2024 and sell it today you would lose (225.00) from holding Sublime China Information or give up 3.68% of portfolio value over 90 days.

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

Bomesc Offshore Engineering  vs.  Sublime China Information

Bomesc Offshore Engi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sublime China Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bomesc Offshore and Sublime China

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

The idea behind Bomesc Offshore Engineering and Sublime China Information 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.