Correlation Between Biopower Operations and China De

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

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

Diversification Opportunities for Biopower Operations and China De

0.0

Correlation Coefficient

Biopower Operations  China De

Pay attention - limited upside

The 3 months correlation between Biopower and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biopower Operations Corp and China De Xiao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China De Xiao and Biopower Operations 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 Biopower Operations Corp are associated (or correlated) with China De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China De Xiao has no effect on the direction of Biopower Operations i.e., Biopower Operations and China De go up and down completely randomly.

Pair Corralation between Biopower Operations and China De

Given the investment horizon of 90 days Biopower Operations Corp is expected to generate 0.8 times more return on investment than China De. However, Biopower Operations Corp is 1.26 times less risky than China De. It trades about 0.03 of its potential returns per unit of risk. China De Xiao is currently generating about 0.02 per unit of risk. If you would invest  9.10  in Biopower Operations Corp on October 10, 2024 and sell it today you would lose (9.09) from holding Biopower Operations Corp or give up 99.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Biopower Operations Corp  vs.  China De Xiao

Biopower Operations Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biopower Operations Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Biopower Operations is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

China De Xiao

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China De Xiao has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Biopower Operations and China De

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

The idea behind Biopower Operations Corp and China De Xiao 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.