Correlation Between Boswell J and China Green

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

By analyzing existing cross correlation between Boswell J G and China Green Agriculture, you can compare the effects of market volatilities on Boswell J and China Green 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 Boswell J with a short position of China Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boswell J and China Green.

Diversification Opportunities for Boswell J and China Green

-0.09

Correlation Coefficient

Boswell J  China Green

Good diversification

The 3 months correlation between Boswell and China is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Boswell J G and China Green Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Green Agriculture and Boswell J 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 Boswell J G are associated (or correlated) with China Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Green Agriculture has no effect on the direction of Boswell J i.e., Boswell J and China Green go up and down completely randomly.

Pair Corralation between Boswell J and China Green

Given the investment horizon of 90 days Boswell J is expected to generate 6.55 times less return on investment than China Green. But when comparing it to its historical volatility, Boswell J G is 6.08 times less risky than China Green. It trades about 0.06 of its potential returns per unit of risk. China Green Agriculture is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  173.00  in China Green Agriculture on September 1, 2024 and sell it today you would earn a total of  25.00  from holding China Green Agriculture or generate 14.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Boswell J G  vs.  China Green Agriculture

Boswell J G

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boswell J G are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Boswell J is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

China Green Agriculture

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Green Agriculture are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, China Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boswell J and China Green

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

The idea behind Boswell J G and China Green Agriculture 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.