Correlation Between Biwin Storage and Xiamen East

Can any of the company-specific risk be diversified away by investing in both Biwin Storage and Xiamen East 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 Xiamen East 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 Xiamen East Asia, you can compare the effects of market volatilities on Biwin Storage and Xiamen East 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 Xiamen East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biwin Storage and Xiamen East.

Diversification Opportunities for Biwin Storage and Xiamen East

0.29

Correlation Coefficient

Biwin Storage  Xiamen East

Modest diversification

The 3 months correlation between Biwin and Xiamen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Biwin Storage Technology and Xiamen East Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen East Asia 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 Xiamen East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen East Asia has no effect on the direction of Biwin Storage i.e., Biwin Storage and Xiamen East go up and down completely randomly.

Pair Corralation between Biwin Storage and Xiamen East

Assuming the 90 days trading horizon Biwin Storage Technology is expected to under-perform the Xiamen East. In addition to that, Biwin Storage is 1.6 times more volatile than Xiamen East Asia. It trades about -0.03 of its total potential returns per unit of risk. Xiamen East Asia is currently generating about -0.02 per unit of volatility. If you would invest  1,059  in Xiamen East Asia on October 10, 2024 and sell it today you would lose (52.00) from holding Xiamen East Asia or give up 4.91% of portfolio value over 90 days.

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

Biwin Storage Technology  vs.  Xiamen East Asia

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biwin Storage Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Xiamen East Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiamen East Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xiamen East 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 Xiamen East

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

The idea behind Biwin Storage Technology and Xiamen East Asia 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.