Correlation Between Bonree Data and Shijiazhuang Tonhe

Can any of the company-specific risk be diversified away by investing in both Bonree Data and Shijiazhuang Tonhe 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 Bonree Data and Shijiazhuang Tonhe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bonree Data Technology and Shijiazhuang Tonhe Electronics, you can compare the effects of market volatilities on Bonree Data and Shijiazhuang Tonhe 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 Bonree Data with a short position of Shijiazhuang Tonhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonree Data and Shijiazhuang Tonhe.

Diversification Opportunities for Bonree Data and Shijiazhuang Tonhe

0.39

Correlation Coefficient

Bonree Data  Shijiazhuang Tonhe

Weak diversification

The 3 months correlation between Bonree and Shijiazhuang is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bonree Data Technology and Shijiazhuang Tonhe Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shijiazhuang Tonhe and Bonree Data 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 Bonree Data Technology are associated (or correlated) with Shijiazhuang Tonhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shijiazhuang Tonhe has no effect on the direction of Bonree Data i.e., Bonree Data and Shijiazhuang Tonhe go up and down completely randomly.

Pair Corralation between Bonree Data and Shijiazhuang Tonhe

Assuming the 90 days trading horizon Bonree Data Technology is expected to generate 1.16 times more return on investment than Shijiazhuang Tonhe. However, Bonree Data is 1.16 times more volatile than Shijiazhuang Tonhe Electronics. It trades about 0.02 of its potential returns per unit of risk. Shijiazhuang Tonhe Electronics is currently generating about 0.01 per unit of risk. If you would invest  4,856  in Bonree Data Technology on October 27, 2024 and sell it today you would lose (356.00) from holding Bonree Data Technology or give up 7.33% of portfolio value over 90 days.

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

Bonree Data Technology  vs.  Shijiazhuang Tonhe Electronics

Bonree Data Technology

Risk-Adjusted Performance

2 of 100

Weak

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

Shijiazhuang Tonhe

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shijiazhuang Tonhe Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shijiazhuang Tonhe sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bonree Data and Shijiazhuang Tonhe

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

The idea behind Bonree Data Technology and Shijiazhuang Tonhe Electronics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.