Correlation Between Hangzhou Pinming and Guangzhou Boji

Can any of the company-specific risk be diversified away by investing in both Hangzhou Pinming and Guangzhou Boji 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 Hangzhou Pinming and Guangzhou Boji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hangzhou Pinming Software and Guangzhou Boji Medical, you can compare the effects of market volatilities on Hangzhou Pinming and Guangzhou Boji 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 Hangzhou Pinming with a short position of Guangzhou Boji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Pinming and Guangzhou Boji.

Diversification Opportunities for Hangzhou Pinming and Guangzhou Boji

0.85

Correlation Coefficient

Hangzhou Pinming  Guangzhou Boji

Very poor diversification

The 3 months correlation between Hangzhou and Guangzhou is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Pinming Software and Guangzhou Boji Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Boji Medical and Hangzhou Pinming 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 Hangzhou Pinming Software are associated (or correlated) with Guangzhou Boji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Boji Medical has no effect on the direction of Hangzhou Pinming i.e., Hangzhou Pinming and Guangzhou Boji go up and down completely randomly.

Pair Corralation between Hangzhou Pinming and Guangzhou Boji

Assuming the 90 days trading horizon Hangzhou Pinming Software is expected to generate 1.14 times more return on investment than Guangzhou Boji. However, Hangzhou Pinming is 1.14 times more volatile than Guangzhou Boji Medical. It trades about -0.05 of its potential returns per unit of risk. Guangzhou Boji Medical is currently generating about -0.06 per unit of risk. If you would invest  2,791  in Hangzhou Pinming Software on October 25, 2024 and sell it today you would lose (349.00) from holding Hangzhou Pinming Software or give up 12.5% of portfolio value over 90 days.

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

Hangzhou Pinming Software  vs.  Guangzhou Boji Medical

Hangzhou Pinming Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Pinming Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Boji Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Boji Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hangzhou Pinming and Guangzhou Boji

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

The idea behind Hangzhou Pinming Software and Guangzhou Boji Medical 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.