Correlation Between Bloomage Biotechnology and Huaxia Eye

Can any of the company-specific risk be diversified away by investing in both Bloomage Biotechnology and Huaxia Eye 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 Bloomage Biotechnology and Huaxia Eye into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bloomage Biotechnology Corp and Huaxia Eye Hospital, you can compare the effects of market volatilities on Bloomage Biotechnology and Huaxia Eye 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 Bloomage Biotechnology with a short position of Huaxia Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomage Biotechnology and Huaxia Eye.

Diversification Opportunities for Bloomage Biotechnology and Huaxia Eye

0.94

Correlation Coefficient

Bloomage Biotechnology  Huaxia Eye

Almost no diversification

The 3 months correlation between Bloomage and Huaxia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bloomage Biotechnology Corp and Huaxia Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaxia Eye Hospital and Bloomage Biotechnology 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 Bloomage Biotechnology Corp are associated (or correlated) with Huaxia Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaxia Eye Hospital has no effect on the direction of Bloomage Biotechnology i.e., Bloomage Biotechnology and Huaxia Eye go up and down completely randomly.

Pair Corralation between Bloomage Biotechnology and Huaxia Eye

Assuming the 90 days trading horizon Bloomage Biotechnology Corp is expected to under-perform the Huaxia Eye. But the stock apears to be less risky and, when comparing its historical volatility, Bloomage Biotechnology Corp is 1.02 times less risky than Huaxia Eye. The stock trades about -0.11 of its potential returns per unit of risk. The Huaxia Eye Hospital is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,107  in Huaxia Eye Hospital on October 11, 2024 and sell it today you would lose (340.00) from holding Huaxia Eye Hospital or give up 16.14% of portfolio value over 90 days.

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

Bloomage Biotechnology Corp  vs.  Huaxia Eye Hospital

Bloomage Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Huaxia Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bloomage Biotechnology and Huaxia Eye

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

The idea behind Bloomage Biotechnology Corp and Huaxia Eye Hospital 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.