Correlation Between Brunswick and Shanrong Biotechnology

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

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

Diversification Opportunities for Brunswick and Shanrong Biotechnology

0.93

Correlation Coefficient

Brunswick  Shanrong Biotechnology

Almost no diversification

The 3 months correlation between Brunswick and Shanrong is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Shanrong Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanrong Biotechnology and Brunswick 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 Brunswick are associated (or correlated) with Shanrong Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanrong Biotechnology has no effect on the direction of Brunswick i.e., Brunswick and Shanrong Biotechnology go up and down completely randomly.

Pair Corralation between Brunswick and Shanrong Biotechnology

Allowing for the 90-day total investment horizon Brunswick is expected to generate 565.33 times less return on investment than Shanrong Biotechnology. But when comparing it to its historical volatility, Brunswick is 6.16 times less risky than Shanrong Biotechnology. It trades about 0.0 of its potential returns per unit of risk. Shanrong Biotechnology Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Shanrong Biotechnology Corp on October 10, 2024 and sell it today you would lose (65.40) from holding Shanrong Biotechnology Corp or give up 87.2% of portfolio value over 90 days.

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

Brunswick  vs.  Shanrong Biotechnology Corp

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shanrong Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanrong Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Brunswick and Shanrong Biotechnology

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

The idea behind Brunswick and Shanrong Biotechnology Corp 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.