Correlation Between Beijing Baolande and Chison Medical

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

Diversification Opportunities for Beijing Baolande and Chison Medical

0.46

Correlation Coefficient

Beijing Baolande  Chison Medical

Very weak diversification

The 3 months correlation between Beijing and Chison is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn 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 Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and Chison Medical go up and down completely randomly.

Pair Corralation between Beijing Baolande and Chison Medical

Assuming the 90 days trading horizon Beijing Baolande Software is expected to under-perform the Chison Medical. In addition to that, Beijing Baolande is 1.68 times more volatile than Chison Medical Technologies. It trades about -0.09 of its total potential returns per unit of risk. Chison Medical Technologies is currently generating about 0.0 per unit of volatility. If you would invest  2,498  in Chison Medical Technologies on October 25, 2024 and sell it today you would lose (39.00) from holding Chison Medical Technologies or give up 1.56% of portfolio value over 90 days.

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

Beijing Baolande Software  vs.  Chison Medical Technologies

Beijing Baolande Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Baolande Software 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.

Chison Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijing Baolande and Chison Medical

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

The idea behind Beijing Baolande Software and Chison Medical Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.