Correlation Between Bin Chuan and ThinTech Materials
Can any of the company-specific risk be diversified away by investing in both Bin Chuan and ThinTech Materials 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 Bin Chuan and ThinTech Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bin Chuan Enterprise and ThinTech Materials Technology, you can compare the effects of market volatilities on Bin Chuan and ThinTech Materials 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 Bin Chuan with a short position of ThinTech Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and ThinTech Materials.
Diversification Opportunities for Bin Chuan and ThinTech Materials
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bin and ThinTech is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and ThinTech Materials Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ThinTech Materials and Bin Chuan 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 Bin Chuan Enterprise are associated (or correlated) with ThinTech Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ThinTech Materials has no effect on the direction of Bin Chuan i.e., Bin Chuan and ThinTech Materials go up and down completely randomly.
Pair Corralation between Bin Chuan and ThinTech Materials
Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 1.51 times more return on investment than ThinTech Materials. However, Bin Chuan is 1.51 times more volatile than ThinTech Materials Technology. It trades about -0.01 of its potential returns per unit of risk. ThinTech Materials Technology is currently generating about -0.27 per unit of risk. If you would invest 5,730 in Bin Chuan Enterprise on October 25, 2024 and sell it today you would lose (170.00) from holding Bin Chuan Enterprise or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bin Chuan Enterprise vs. ThinTech Materials Technology
Performance |
| Timeline |
| Bin Chuan Enterprise |
| ThinTech Materials |
Bin Chuan and ThinTech Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bin Chuan and ThinTech Materials
The main advantage of trading using opposite Bin Chuan and ThinTech Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bin Chuan position performs unexpectedly, ThinTech Materials 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 ThinTech Materials will offset losses from the drop in ThinTech Materials' long position.| Bin Chuan vs. Sports Gear Co | Bin Chuan vs. Insyde Software | Bin Chuan vs. U Media Communications | Bin Chuan vs. Far EasTone Telecommunications |
| ThinTech Materials vs. Jetwell Computer Co | ThinTech Materials vs. U Media Communications | ThinTech Materials vs. Iron Force Industrial | ThinTech Materials vs. Elitegroup Computer Systems |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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