Correlation Between Eyebright Medical and Shenzhen Bingchuan

Can any of the company-specific risk be diversified away by investing in both Eyebright Medical and Shenzhen Bingchuan 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 Eyebright Medical and Shenzhen Bingchuan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eyebright Medical Technology and Shenzhen Bingchuan Network, you can compare the effects of market volatilities on Eyebright Medical and Shenzhen Bingchuan 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 Eyebright Medical with a short position of Shenzhen Bingchuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eyebright Medical and Shenzhen Bingchuan.

Diversification Opportunities for Eyebright Medical and Shenzhen Bingchuan

-0.27

Correlation Coefficient

Eyebright Medical  Shenzhen Bingchuan

Very good diversification

The 3 months correlation between Eyebright and Shenzhen is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eyebright Medical Technology and Shenzhen Bingchuan Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Bingchuan and Eyebright Medical 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 Eyebright Medical Technology are associated (or correlated) with Shenzhen Bingchuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Bingchuan has no effect on the direction of Eyebright Medical i.e., Eyebright Medical and Shenzhen Bingchuan go up and down completely randomly.

Pair Corralation between Eyebright Medical and Shenzhen Bingchuan

Assuming the 90 days trading horizon Eyebright Medical Technology is expected to under-perform the Shenzhen Bingchuan. But the stock apears to be less risky and, when comparing its historical volatility, Eyebright Medical Technology is 1.68 times less risky than Shenzhen Bingchuan. The stock trades about -0.03 of its potential returns per unit of risk. The Shenzhen Bingchuan Network is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,897  in Shenzhen Bingchuan Network on October 7, 2024 and sell it today you would lose (72.00) from holding Shenzhen Bingchuan Network or give up 3.8% of portfolio value over 90 days.

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

Eyebright Medical Technology  vs.  Shenzhen Bingchuan Network

Eyebright Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyebright Medical Technology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shenzhen Bingchuan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eyebright Medical and Shenzhen Bingchuan

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

The idea behind Eyebright Medical Technology and Shenzhen Bingchuan Network 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.