Correlation Between Bomesc Offshore and Yangmei Chemical

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

Diversification Opportunities for Bomesc Offshore and Yangmei Chemical

0.26

Correlation Coefficient

Bomesc Offshore  Yangmei Chemical

Modest diversification

The 3 months correlation between Bomesc and Yangmei is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Yangmei Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangmei Chemical 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 Yangmei Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangmei Chemical has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Yangmei Chemical go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Yangmei Chemical

Assuming the 90 days trading horizon Bomesc Offshore Engineering is expected to generate 0.65 times more return on investment than Yangmei Chemical. However, Bomesc Offshore Engineering is 1.53 times less risky than Yangmei Chemical. It trades about 0.08 of its potential returns per unit of risk. Yangmei Chemical Co is currently generating about -0.1 per unit of risk. If you would invest  1,247  in Bomesc Offshore Engineering on December 2, 2024 and sell it today you would earn a total of  96.00  from holding Bomesc Offshore Engineering or generate 7.7% return on investment over 90 days.

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

Bomesc Offshore Engineering  vs.  Yangmei Chemical Co

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.

Yangmei Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yangmei Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bomesc Offshore and Yangmei Chemical

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

The idea behind Bomesc Offshore Engineering and Yangmei Chemical Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.