Correlation Between Ningbo MedicalSystem and Changchun BCHT

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Can any of the company-specific risk be diversified away by investing in both Ningbo MedicalSystem and Changchun BCHT 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 Ningbo MedicalSystem and Changchun BCHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ningbo MedicalSystem Biotechnology and Changchun BCHT Biotechnology, you can compare the effects of market volatilities on Ningbo MedicalSystem and Changchun BCHT 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 Ningbo MedicalSystem with a short position of Changchun BCHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo MedicalSystem and Changchun BCHT.

Diversification Opportunities for Ningbo MedicalSystem and Changchun BCHT

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ningbo and Changchun is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo MedicalSystem Biotechno and Changchun BCHT Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun BCHT Biote and Ningbo MedicalSystem 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 Ningbo MedicalSystem Biotechnology are associated (or correlated) with Changchun BCHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun BCHT Biote has no effect on the direction of Ningbo MedicalSystem i.e., Ningbo MedicalSystem and Changchun BCHT go up and down completely randomly.

Pair Corralation between Ningbo MedicalSystem and Changchun BCHT

Assuming the 90 days trading horizon Ningbo MedicalSystem Biotechnology is expected to generate 1.04 times more return on investment than Changchun BCHT. However, Ningbo MedicalSystem is 1.04 times more volatile than Changchun BCHT Biotechnology. It trades about 0.14 of its potential returns per unit of risk. Changchun BCHT Biotechnology is currently generating about 0.04 per unit of risk. If you would invest  1,082  in Ningbo MedicalSystem Biotechnology on September 3, 2024 and sell it today you would earn a total of  79.00  from holding Ningbo MedicalSystem Biotechnology or generate 7.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ningbo MedicalSystem Biotechno  vs.  Changchun BCHT Biotechnology

 Performance 
       Timeline  
Ningbo MedicalSystem 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo MedicalSystem Biotechnology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo MedicalSystem sustained solid returns over the last few months and may actually be approaching a breakup point.
Changchun BCHT Biote 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Changchun BCHT Biotechnology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changchun BCHT sustained solid returns over the last few months and may actually be approaching a breakup point.

Ningbo MedicalSystem and Changchun BCHT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ningbo MedicalSystem and Changchun BCHT

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

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