Correlation Between Shanrong Biotechnology and Biopower Operations

Can any of the company-specific risk be diversified away by investing in both Shanrong Biotechnology and Biopower Operations 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 Shanrong Biotechnology and Biopower Operations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanrong Biotechnology Corp and Biopower Operations Corp, you can compare the effects of market volatilities on Shanrong Biotechnology and Biopower Operations 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 Shanrong Biotechnology with a short position of Biopower Operations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanrong Biotechnology and Biopower Operations.

Diversification Opportunities for Shanrong Biotechnology and Biopower Operations

0.0

Correlation Coefficient

Shanrong Biotechnology  Biopower Operations

Pay attention - limited upside

The 3 months correlation between Shanrong and Biopower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shanrong Biotechnology Corp and Biopower Operations Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biopower Operations Corp and Shanrong Biotechnology 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 Shanrong Biotechnology Corp are associated (or correlated) with Biopower Operations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biopower Operations Corp has no effect on the direction of Shanrong Biotechnology i.e., Shanrong Biotechnology and Biopower Operations go up and down completely randomly.

Pair Corralation between Shanrong Biotechnology and Biopower Operations

If you would invest  49.00  in Shanrong Biotechnology Corp on October 25, 2024 and sell it today you would earn a total of  51.00  from holding Shanrong Biotechnology Corp or generate 104.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Shanrong Biotechnology Corp  vs.  Biopower Operations Corp

Shanrong Biotechnology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanrong Biotechnology Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Shanrong Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biopower Operations Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biopower Operations Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Biopower Operations is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shanrong Biotechnology and Biopower Operations

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

The idea behind Shanrong Biotechnology Corp and Biopower Operations Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.