Correlation Between Beijing Baolande and Sinomach General

Can any of the company-specific risk be diversified away by investing in both Beijing Baolande and Sinomach General 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 Sinomach General 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 Sinomach General Machinery, you can compare the effects of market volatilities on Beijing Baolande and Sinomach General 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 Sinomach General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Baolande and Sinomach General.

Diversification Opportunities for Beijing Baolande and Sinomach General

0.33

Correlation Coefficient

Beijing Baolande  Sinomach General

Weak diversification

The 3 months correlation between Beijing and Sinomach is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and Sinomach General Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach General Mac 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 Sinomach General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach General Mac has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and Sinomach General go up and down completely randomly.

Pair Corralation between Beijing Baolande and Sinomach General

Assuming the 90 days trading horizon Beijing Baolande is expected to generate 1.31 times less return on investment than Sinomach General. In addition to that, Beijing Baolande is 2.96 times more volatile than Sinomach General Machinery. It trades about 0.03 of its total potential returns per unit of risk. Sinomach General Machinery is currently generating about 0.12 per unit of volatility. If you would invest  1,501  in Sinomach General Machinery on December 26, 2024 and sell it today you would earn a total of  173.00  from holding Sinomach General Machinery or generate 11.53% return on investment over 90 days.

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

Beijing Baolande Software  vs.  Sinomach General Machinery

Beijing Baolande Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Baolande Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Baolande may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sinomach General Mac

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinomach General Machinery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomach General sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Baolande and Sinomach General

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

The idea behind Beijing Baolande Software and Sinomach General Machinery 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..