Correlation Between Biwin Storage and Shenzhen Kaifa

Can any of the company-specific risk be diversified away by investing in both Biwin Storage and Shenzhen Kaifa 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 Biwin Storage and Shenzhen Kaifa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Biwin Storage Technology and Shenzhen Kaifa Technology, you can compare the effects of market volatilities on Biwin Storage and Shenzhen Kaifa 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 Biwin Storage with a short position of Shenzhen Kaifa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biwin Storage and Shenzhen Kaifa.

Diversification Opportunities for Biwin Storage and Shenzhen Kaifa

0.65

Correlation Coefficient

Biwin Storage  Shenzhen Kaifa

Poor diversification

The 3 months correlation between Biwin and Shenzhen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biwin Storage Technology and Shenzhen Kaifa Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Kaifa Technology and Biwin Storage 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 Biwin Storage Technology are associated (or correlated) with Shenzhen Kaifa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Kaifa Technology has no effect on the direction of Biwin Storage i.e., Biwin Storage and Shenzhen Kaifa go up and down completely randomly.

Pair Corralation between Biwin Storage and Shenzhen Kaifa

Assuming the 90 days trading horizon Biwin Storage Technology is expected to generate 1.24 times more return on investment than Shenzhen Kaifa. However, Biwin Storage is 1.24 times more volatile than Shenzhen Kaifa Technology. It trades about 0.05 of its potential returns per unit of risk. Shenzhen Kaifa Technology is currently generating about 0.01 per unit of risk. If you would invest  6,801  in Biwin Storage Technology on December 25, 2024 and sell it today you would earn a total of  500.00  from holding Biwin Storage Technology or generate 7.35% return on investment over 90 days.

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

Biwin Storage Technology  vs.  Shenzhen Kaifa Technology

Biwin Storage Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biwin Storage Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biwin Storage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shenzhen Kaifa Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Kaifa Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Kaifa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biwin Storage and Shenzhen Kaifa

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

The idea behind Biwin Storage Technology and Shenzhen Kaifa Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.