Correlation Between Bomesc Offshore and Zhejiang Orient

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

Diversification Opportunities for Bomesc Offshore and Zhejiang Orient

0.83

Correlation Coefficient

Bomesc Offshore  Zhejiang Orient

Very poor diversification

The 3 months correlation between Bomesc and Zhejiang is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bomesc Offshore Engineering and Zhejiang Orient Gene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Orient Gene 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 Zhejiang Orient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Orient Gene has no effect on the direction of Bomesc Offshore i.e., Bomesc Offshore and Zhejiang Orient go up and down completely randomly.

Pair Corralation between Bomesc Offshore and Zhejiang Orient

Assuming the 90 days trading horizon Bomesc Offshore Engineering is expected to generate 0.66 times more return on investment than Zhejiang Orient. However, Bomesc Offshore Engineering is 1.52 times less risky than Zhejiang Orient. It trades about 0.19 of its potential returns per unit of risk. Zhejiang Orient Gene is currently generating about 0.06 per unit of risk. If you would invest  968.00  in Bomesc Offshore Engineering on September 12, 2024 and sell it today you would earn a total of  302.00  from holding Bomesc Offshore Engineering or generate 31.2% return on investment over 90 days.

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

Bomesc Offshore Engineering  vs.  Zhejiang Orient Gene

Bomesc Offshore Engi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bomesc Offshore Engineering are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bomesc Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Orient Gene

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Orient Gene are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Orient sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bomesc Offshore and Zhejiang Orient

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

The idea behind Bomesc Offshore Engineering and Zhejiang Orient Gene 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.