Correlation Between Bin Chuan and Li Kang
Can any of the company-specific risk be diversified away by investing in both Bin Chuan and Li Kang 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 Li Kang 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 Li Kang Biomedical, you can compare the effects of market volatilities on Bin Chuan and Li Kang 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 Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Li Kang.
Diversification Opportunities for Bin Chuan and Li Kang
Very good diversification
The 3 months correlation between Bin and 6242 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical 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 Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Bin Chuan i.e., Bin Chuan and Li Kang go up and down completely randomly.
Pair Corralation between Bin Chuan and Li Kang
Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 4.41 times more return on investment than Li Kang. However, Bin Chuan is 4.41 times more volatile than Li Kang Biomedical. It trades about 0.45 of its potential returns per unit of risk. Li Kang Biomedical is currently generating about 0.01 per unit of risk. If you would invest 2,655 in Bin Chuan Enterprise on September 12, 2024 and sell it today you would earn a total of 4,485 from holding Bin Chuan Enterprise or generate 168.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bin Chuan Enterprise vs. Li Kang Biomedical
Performance |
| Timeline |
| Bin Chuan Enterprise |
| Li Kang Biomedical |
Bin Chuan and Li Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bin Chuan and Li Kang
The main advantage of trading using opposite Bin Chuan and Li Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bin Chuan position performs unexpectedly, Li Kang 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 Li Kang will offset losses from the drop in Li Kang's long position.| Bin Chuan vs. Lihtai Construction Enterprise | Bin Chuan vs. Sports Gear Co | Bin Chuan vs. Eastern Media International | Bin Chuan vs. Kindom Construction Corp |
| Li Kang vs. Standard Foods Corp | Li Kang vs. Uni President Enterprises Corp | Li Kang vs. Great Wall Enterprise | Li Kang vs. Ruentex Development Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |