Correlation Between Bomin Electronics and Ming Yang

Can any of the company-specific risk be diversified away by investing in both Bomin Electronics and Ming Yang 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 Bomin Electronics and Ming Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bomin Electronics Co and Ming Yang Smart, you can compare the effects of market volatilities on Bomin Electronics and Ming Yang 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 Bomin Electronics with a short position of Ming Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bomin Electronics and Ming Yang.

Diversification Opportunities for Bomin Electronics and Ming Yang

0.71

Correlation Coefficient

Bomin Electronics  Ming Yang

Poor diversification

The 3 months correlation between Bomin and Ming is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bomin Electronics Co and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart and Bomin Electronics 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 Bomin Electronics Co are associated (or correlated) with Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of Bomin Electronics i.e., Bomin Electronics and Ming Yang go up and down completely randomly.

Pair Corralation between Bomin Electronics and Ming Yang

Assuming the 90 days trading horizon Bomin Electronics is expected to generate 2.09 times less return on investment than Ming Yang. In addition to that, Bomin Electronics is 1.02 times more volatile than Ming Yang Smart. It trades about 0.05 of its total potential returns per unit of risk. Ming Yang Smart is currently generating about 0.12 per unit of volatility. If you would invest  882.00  in Ming Yang Smart on October 4, 2024 and sell it today you would earn a total of  379.00  from holding Ming Yang Smart or generate 42.97% return on investment over 90 days.

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

Bomin Electronics Co  vs.  Ming Yang Smart

Bomin Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bomin Electronics Co 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.

Ming Yang Smart

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Bomin Electronics and Ming Yang

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

The idea behind Bomin Electronics Co and Ming Yang Smart 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.