Correlation Between China Overseas and BigBearai Holdings

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

By analyzing existing cross correlation between China Overseas Land and BigBearai Holdings, you can compare the effects of market volatilities on China Overseas and BigBearai Holdings 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 China Overseas with a short position of BigBearai Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and BigBearai Holdings.

Diversification Opportunities for China Overseas and BigBearai Holdings

-0.74

Correlation Coefficient

China Overseas  BigBearai Holdings

Pay attention - limited upside

The 3 months correlation between China and BigBearai is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings and China Overseas 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 China Overseas Land are associated (or correlated) with BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of China Overseas i.e., China Overseas and BigBearai Holdings go up and down completely randomly.

Pair Corralation between China Overseas and BigBearai Holdings

Assuming the 90 days horizon China Overseas is expected to generate 8.32 times less return on investment than BigBearai Holdings. But when comparing it to its historical volatility, China Overseas Land is 2.23 times less risky than BigBearai Holdings. It trades about 0.02 of its potential returns per unit of risk. BigBearai Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  199.00  in BigBearai Holdings on October 7, 2024 and sell it today you would earn a total of  254.00  from holding BigBearai Holdings or generate 127.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

China Overseas Land  vs.  BigBearai Holdings

China Overseas Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Overseas Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BigBearai Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Overseas and BigBearai Holdings

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

The idea behind China Overseas Land and BigBearai Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.