Correlation Between Changchun BCHT and Sinocat Environmental
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By analyzing existing cross correlation between Changchun BCHT Biotechnology and Sinocat Environmental Technology, you can compare the effects of market volatilities on Changchun BCHT and Sinocat Environmental 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 Changchun BCHT with a short position of Sinocat Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun BCHT and Sinocat Environmental.
Diversification Opportunities for Changchun BCHT and Sinocat Environmental
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Changchun and Sinocat is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Changchun BCHT Biotechnology and Sinocat Environmental Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocat Environmental and Changchun BCHT 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 Changchun BCHT Biotechnology are associated (or correlated) with Sinocat Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocat Environmental has no effect on the direction of Changchun BCHT i.e., Changchun BCHT and Sinocat Environmental go up and down completely randomly.
Pair Corralation between Changchun BCHT and Sinocat Environmental
Assuming the 90 days trading horizon Changchun BCHT Biotechnology is expected to under-perform the Sinocat Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Changchun BCHT Biotechnology is 2.55 times less risky than Sinocat Environmental. The stock trades about -0.16 of its potential returns per unit of risk. The Sinocat Environmental Technology is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,633 in Sinocat Environmental Technology on November 9, 2024 and sell it today you would earn a total of 180.00 from holding Sinocat Environmental Technology or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun BCHT Biotechnology vs. Sinocat Environmental Technolo
Performance |
| Timeline |
| Changchun BCHT Biote |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Sinocat Environmental |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
Changchun BCHT and Sinocat Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun BCHT and Sinocat Environmental
The main advantage of trading using opposite Changchun BCHT and Sinocat Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun BCHT position performs unexpectedly, Sinocat Environmental 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 Sinocat Environmental will offset losses from the drop in Sinocat Environmental's long position.The idea behind Changchun BCHT Biotechnology and Sinocat Environmental Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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