Correlation Between Cultural Investment and Bomin Electronics
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By analyzing existing cross correlation between Cultural Investment Holdings and Bomin Electronics Co, you can compare the effects of market volatilities on Cultural Investment and Bomin Electronics 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 Cultural Investment with a short position of Bomin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and Bomin Electronics.
Diversification Opportunities for Cultural Investment and Bomin Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cultural and Bomin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Bomin Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bomin Electronics and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Bomin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bomin Electronics has no effect on the direction of Cultural Investment i.e., Cultural Investment and Bomin Electronics go up and down completely randomly.
Pair Corralation between Cultural Investment and Bomin Electronics
Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 1.2 times more return on investment than Bomin Electronics. However, Cultural Investment is 1.2 times more volatile than Bomin Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Bomin Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 206.00 in Cultural Investment Holdings on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Cultural Investment Holdings or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cultural Investment Holdings vs. Bomin Electronics Co
Performance |
| Timeline |
| Cultural Investment |
| Bomin Electronics |
Cultural Investment and Bomin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cultural Investment and Bomin Electronics
The main advantage of trading using opposite Cultural Investment and Bomin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cultural Investment position performs unexpectedly, Bomin Electronics 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 Bomin Electronics will offset losses from the drop in Bomin Electronics' long position.The idea behind Cultural Investment Holdings and Bomin Electronics Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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