Correlation Between Bingo Software and Guocheng Mining

Can any of the company-specific risk be diversified away by investing in both Bingo Software and Guocheng Mining 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 Bingo Software and Guocheng Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bingo Software Co and Guocheng Mining Co, you can compare the effects of market volatilities on Bingo Software and Guocheng Mining 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 Bingo Software with a short position of Guocheng Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bingo Software and Guocheng Mining.

Diversification Opportunities for Bingo Software and Guocheng Mining

0.69

Correlation Coefficient

Bingo Software  Guocheng Mining

Poor diversification

The 3 months correlation between Bingo and Guocheng is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bingo Software Co and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and Bingo Software 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 Bingo Software Co are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of Bingo Software i.e., Bingo Software and Guocheng Mining go up and down completely randomly.

Pair Corralation between Bingo Software and Guocheng Mining

Assuming the 90 days trading horizon Bingo Software Co is expected to generate 1.35 times more return on investment than Guocheng Mining. However, Bingo Software is 1.35 times more volatile than Guocheng Mining Co. It trades about 0.21 of its potential returns per unit of risk. Guocheng Mining Co is currently generating about 0.03 per unit of risk. If you would invest  1,386  in Bingo Software Co on October 11, 2024 and sell it today you would earn a total of  1,130  from holding Bingo Software Co or generate 81.53% return on investment over 90 days.

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

Bingo Software Co  vs.  Guocheng Mining Co

Bingo Software

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bingo Software Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bingo Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Guocheng Mining

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Bingo Software and Guocheng Mining

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

The idea behind Bingo Software Co and Guocheng Mining Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.