Correlation Between Sunny Loan and Changchun BCHT

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

Diversification Opportunities for Sunny Loan and Changchun BCHT

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sunny and Changchun is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Loan Top 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 Sunny Loan 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 Sunny Loan Top 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 Sunny Loan i.e., Sunny Loan and Changchun BCHT go up and down completely randomly.

Pair Corralation between Sunny Loan and Changchun BCHT

Assuming the 90 days trading horizon Sunny Loan Top is expected to generate 1.53 times more return on investment than Changchun BCHT. However, Sunny Loan is 1.53 times more volatile than Changchun BCHT Biotechnology. It trades about -0.04 of its potential returns per unit of risk. Changchun BCHT Biotechnology is currently generating about -0.53 per unit of risk. If you would invest  915.00  in Sunny Loan Top on November 7, 2024 and sell it today you would lose (13.00) from holding Sunny Loan Top or give up 1.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sunny Loan Top  vs.  Changchun BCHT Biotechnology

 Performance 
       Timeline  
Sunny Loan Top 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sunny Loan Top has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Changchun BCHT Biote 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Changchun BCHT Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sunny Loan and Changchun BCHT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunny Loan and Changchun BCHT

The main advantage of trading using opposite Sunny Loan and Changchun BCHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Loan 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.
The idea behind Sunny Loan Top 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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