Correlation Between CanSino Biologics and BG Foods

Can any of the company-specific risk be diversified away by investing in both CanSino Biologics and BG Foods 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 CanSino Biologics and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CanSino Biologics and BG Foods, you can compare the effects of market volatilities on CanSino Biologics and BG Foods 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 CanSino Biologics with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CanSino Biologics and BG Foods.

Diversification Opportunities for CanSino Biologics and BG Foods

-0.52

Correlation Coefficient

CanSino Biologics  BG Foods

Excellent diversification

The 3 months correlation between CanSino and DHR is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and CanSino Biologics 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 CanSino Biologics are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of CanSino Biologics i.e., CanSino Biologics and BG Foods go up and down completely randomly.

Pair Corralation between CanSino Biologics and BG Foods

Assuming the 90 days trading horizon CanSino Biologics is expected to generate 1.04 times more return on investment than BG Foods. However, CanSino Biologics is 1.04 times more volatile than BG Foods. It trades about 0.19 of its potential returns per unit of risk. BG Foods is currently generating about 0.05 per unit of risk. If you would invest  356.00  in CanSino Biologics on October 5, 2024 and sell it today you would earn a total of  36.00  from holding CanSino Biologics or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CanSino Biologics  vs.  BG Foods

CanSino Biologics

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CanSino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, CanSino Biologics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CanSino Biologics and BG Foods

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

The idea behind CanSino Biologics and BG Foods 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 Stocks Directory module to find actively traded stocks across global markets.