Correlation Between Bin Chuan and Pontex Polyblend | 1569.TWO vs. 8935.TWO

Correlation Between Bin Chuan and Pontex Polyblend

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Can any of the company-specific risk be diversified away by investing in both Bin Chuan and Pontex Polyblend 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 Pontex Polyblend 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 Pontex Polyblend CoLtd, you can compare the effects of market volatilities on Bin Chuan and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Pontex Polyblend.

Diversification Opportunities for Bin Chuan and Pontex Polyblend

BinPontexDiversified AwayBinPontexDiversified Away100%
0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Bin and Pontex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of Bin Chuan i.e., Bin Chuan and Pontex Polyblend go up and down completely randomly.

Pair Corralation between Bin Chuan and Pontex Polyblend

Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 0.81 times more return on investment than Pontex Polyblend. However, Bin Chuan Enterprise is 1.23 times less risky than Pontex Polyblend. It trades about 0.14 of its potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about 0.06 per unit of risk. If you would invest  2,111  in Bin Chuan Enterprise on September 14, 2024 and sell it today you would earn a total of  4,549  from holding Bin Chuan Enterprise or generate 215.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.74%
ValuesDaily Returns

Bin Chuan Enterprise  vs.  Pontex Polyblend CoLtd

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 050100150
JavaScript chart by amCharts 3.21.151569 8935
       Timeline  
Bin Chuan Enterprise 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bin Chuan showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec303540455055606570
Pontex Polyblend CoLtd 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pontex Polyblend CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pontex Polyblend showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1718192021222324

Bin Chuan and Pontex Polyblend Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.77-8.07-5.36-2.660.03.146.459.7613.0716.37 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.151569 8935
       Returns  

Pair Trading with Bin Chuan and Pontex Polyblend

The main advantage of trading using opposite Bin Chuan and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bin Chuan position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend's long position.
The idea behind Bin Chuan Enterprise and Pontex Polyblend CoLtd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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