Correlation Between Bosideng International and H M

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

By analyzing existing cross correlation between Bosideng International Holdings and H M Hennes, you can compare the effects of market volatilities on Bosideng International and H M 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 Bosideng International with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosideng International and H M.

Diversification Opportunities for Bosideng International and H M

0.23

Correlation Coefficient

Bosideng International  H M

Modest diversification

The 3 months correlation between Bosideng and HMRZF is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bosideng International Holding and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and Bosideng International 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 Bosideng International Holdings are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of Bosideng International i.e., Bosideng International and H M go up and down completely randomly.

Pair Corralation between Bosideng International and H M

Assuming the 90 days horizon Bosideng International Holdings is expected to under-perform the H M. In addition to that, Bosideng International is 2.13 times more volatile than H M Hennes. It trades about -0.01 of its total potential returns per unit of risk. H M Hennes is currently generating about 0.01 per unit of volatility. If you would invest  1,319  in H M Hennes on December 30, 2024 and sell it today you would earn a total of  4.00  from holding H M Hennes or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Bosideng International Holding  vs.  H M Hennes

Bosideng International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bosideng International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Bosideng International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H M is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bosideng International and H M

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

The idea behind Bosideng International Holdings and H M Hennes 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.