Correlation Between Beijing Baolande and Chenzhou Jingui

Can any of the company-specific risk be diversified away by investing in both Beijing Baolande and Chenzhou Jingui 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 Beijing Baolande and Chenzhou Jingui into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beijing Baolande Software and Chenzhou Jingui Silver, you can compare the effects of market volatilities on Beijing Baolande and Chenzhou Jingui 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 Beijing Baolande with a short position of Chenzhou Jingui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Baolande and Chenzhou Jingui.

Diversification Opportunities for Beijing Baolande and Chenzhou Jingui

0.55

Correlation Coefficient

Beijing Baolande  Chenzhou Jingui

Very weak diversification

The 3 months correlation between Beijing and Chenzhou is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and Chenzhou Jingui Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenzhou Jingui Silver and Beijing Baolande 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 Beijing Baolande Software are associated (or correlated) with Chenzhou Jingui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenzhou Jingui Silver has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and Chenzhou Jingui go up and down completely randomly.

Pair Corralation between Beijing Baolande and Chenzhou Jingui

Assuming the 90 days trading horizon Beijing Baolande Software is expected to under-perform the Chenzhou Jingui. In addition to that, Beijing Baolande is 1.48 times more volatile than Chenzhou Jingui Silver. It trades about -0.01 of its total potential returns per unit of risk. Chenzhou Jingui Silver is currently generating about 0.02 per unit of volatility. If you would invest  306.00  in Chenzhou Jingui Silver on October 10, 2024 and sell it today you would earn a total of  35.00  from holding Chenzhou Jingui Silver or generate 11.44% return on investment over 90 days.

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

Beijing Baolande Software  vs.  Chenzhou Jingui Silver

Beijing Baolande Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Baolande Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Beijing Baolande is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chenzhou Jingui Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chenzhou Jingui may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Beijing Baolande and Chenzhou Jingui

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

The idea behind Beijing Baolande Software and Chenzhou Jingui Silver 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.