Correlation Between Biopower Operations and Shanrong Biotechnology

Can any of the company-specific risk be diversified away by investing in both Biopower Operations 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 Biopower Operations and Shanrong Biotechnology 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 Shanrong Biotechnology Corp, you can compare the effects of market volatilities on Biopower Operations 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 Biopower Operations with a short position of Shanrong Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biopower Operations and Shanrong Biotechnology.

Diversification Opportunities for Biopower Operations and Shanrong Biotechnology

0.0

Correlation Coefficient

Biopower Operations  Shanrong Biotechnology

Pay attention - limited upside

The 3 months correlation between Biopower and Shanrong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biopower Operations Corp and Shanrong Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanrong Biotechnology 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 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 Biopower Operations i.e., Biopower Operations and Shanrong Biotechnology go up and down completely randomly.

Pair Corralation between Biopower Operations and Shanrong Biotechnology

Given the investment horizon of 90 days Biopower Operations Corp is expected to generate 1.05 times more return on investment than Shanrong Biotechnology. However, Biopower Operations is 1.05 times more volatile than Shanrong Biotechnology Corp. It trades about 0.03 of its potential returns per unit of risk. Shanrong Biotechnology Corp is currently generating about 0.03 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.  Shanrong Biotechnology Corp

Biopower Operations Corp

Risk-Adjusted Performance

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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 current stock price disarray, may contribute to short-term losses for the investors.

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 Biopower Operations and Shanrong Biotechnology

The main advantage of trading using opposite Biopower Operations and Shanrong Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biopower Operations 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 Biopower Operations Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.