Correlation Between Beijing Baolande and Allgens Medical

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

Diversification Opportunities for Beijing Baolande and Allgens Medical

-0.05

Correlation Coefficient

Beijing Baolande  Allgens Medical

Good diversification

The 3 months correlation between Beijing and Allgens is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and Allgens Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allgens Medical Tech 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 Allgens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allgens Medical Tech has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and Allgens Medical go up and down completely randomly.

Pair Corralation between Beijing Baolande and Allgens Medical

Assuming the 90 days trading horizon Beijing Baolande Software is expected to generate 3.04 times more return on investment than Allgens Medical. However, Beijing Baolande is 3.04 times more volatile than Allgens Medical Technology. It trades about 0.04 of its potential returns per unit of risk. Allgens Medical Technology is currently generating about -0.13 per unit of risk. If you would invest  2,885  in Beijing Baolande Software on December 25, 2024 and sell it today you would earn a total of  115.00  from holding Beijing Baolande Software or generate 3.99% return on investment over 90 days.

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

Beijing Baolande Software  vs.  Allgens Medical Technology

Beijing Baolande Software

Risk-Adjusted Performance

Insignificant

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.

Allgens Medical Tech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Beijing Baolande and Allgens Medical

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

The idea behind Beijing Baolande Software and Allgens Medical Technology 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 Anywhere module to track or share privately all of your investments from the convenience of any device.