Correlation Between Bomesc Offshore and Hua Xia

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

Diversification Opportunities for Bomesc Offshore and Hua Xia

-0.47

Correlation Coefficient

Bomesc Offshore  Hua Xia

Very good diversification

The 3 months correlation between Bomesc and Hua is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Hua Xia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Xia Bank 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 Hua Xia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Xia Bank has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Hua Xia go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Hua Xia

Assuming the 90 days trading horizon Bomesc Offshore Engineering is expected to generate 1.58 times more return on investment than Hua Xia. However, Bomesc Offshore is 1.58 times more volatile than Hua Xia Bank. It trades about 0.1 of its potential returns per unit of risk. Hua Xia Bank is currently generating about -0.09 per unit of risk. If you would invest  1,248  in Bomesc Offshore Engineering on December 4, 2024 and sell it today you would earn a total of  113.00  from holding Bomesc Offshore Engineering or generate 9.05% return on investment over 90 days.

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

Bomesc Offshore Engineering  vs.  Hua Xia Bank

Bomesc Offshore Engi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bomesc Offshore Engineering are ranked lower than 7 (%) 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.

Hua Xia Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hua Xia Bank 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 Bomesc Offshore and Hua Xia

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

The idea behind Bomesc Offshore Engineering and Hua Xia Bank 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.