Correlation Between Chison Medical and Xinjiang Beixin

Can any of the company-specific risk be diversified away by investing in both Chison Medical and Xinjiang Beixin 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 Chison Medical and Xinjiang Beixin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chison Medical Technologies and Xinjiang Beixin RoadBridge, you can compare the effects of market volatilities on Chison Medical and Xinjiang Beixin 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 Chison Medical with a short position of Xinjiang Beixin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chison Medical and Xinjiang Beixin.

Diversification Opportunities for Chison Medical and Xinjiang Beixin

0.88

Correlation Coefficient

Chison Medical  Xinjiang Beixin

Very poor diversification

The 3 months correlation between Chison and Xinjiang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Chison Medical Technologies and Xinjiang Beixin RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Beixin Road and Chison Medical 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 Chison Medical Technologies are associated (or correlated) with Xinjiang Beixin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Beixin Road has no effect on the direction of Chison Medical i.e., Chison Medical and Xinjiang Beixin go up and down completely randomly.

Pair Corralation between Chison Medical and Xinjiang Beixin

Assuming the 90 days trading horizon Chison Medical Technologies is expected to generate 1.13 times more return on investment than Xinjiang Beixin. However, Chison Medical is 1.13 times more volatile than Xinjiang Beixin RoadBridge. It trades about 0.15 of its potential returns per unit of risk. Xinjiang Beixin RoadBridge is currently generating about 0.16 per unit of risk. If you would invest  1,933  in Chison Medical Technologies on September 22, 2024 and sell it today you would earn a total of  697.00  from holding Chison Medical Technologies or generate 36.06% return on investment over 90 days.

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

Chison Medical Technologies  vs.  Xinjiang Beixin RoadBridge

Chison Medical Techn

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Xinjiang Beixin Road

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Beixin RoadBridge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Beixin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chison Medical and Xinjiang Beixin

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

The idea behind Chison Medical Technologies and Xinjiang Beixin RoadBridge 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.