Correlation Between Bowlin Travel and China Liberal

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

By analyzing existing cross correlation between Bowlin Travel Centers and China Liberal Education, you can compare the effects of market volatilities on Bowlin Travel and China Liberal 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 Bowlin Travel with a short position of China Liberal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowlin Travel and China Liberal.

Diversification Opportunities for Bowlin Travel and China Liberal

-0.07

Correlation Coefficient

Bowlin Travel  China Liberal

Good diversification

The 3 months correlation between Bowlin and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bowlin Travel Centers and China Liberal Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Liberal Education and Bowlin Travel 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 Bowlin Travel Centers are associated (or correlated) with China Liberal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Liberal Education has no effect on the direction of Bowlin Travel i.e., Bowlin Travel and China Liberal go up and down completely randomly.

Pair Corralation between Bowlin Travel and China Liberal

Given the investment horizon of 90 days Bowlin Travel Centers is expected to generate 0.28 times more return on investment than China Liberal. However, Bowlin Travel Centers is 3.61 times less risky than China Liberal. It trades about -0.02 of its potential returns per unit of risk. China Liberal Education is currently generating about -0.17 per unit of risk. If you would invest  450.00  in Bowlin Travel Centers on September 22, 2024 and sell it today you would lose (50.00) from holding Bowlin Travel Centers or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Bowlin Travel Centers  vs.  China Liberal Education

Bowlin Travel Centers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowlin Travel Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bowlin Travel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

China Liberal Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bowlin Travel and China Liberal

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

The idea behind Bowlin Travel Centers and China Liberal Education 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.