Correlation Between Changchun and Jiangsu Bioperfectus

Can any of the company-specific risk be diversified away by investing in both Changchun and Jiangsu Bioperfectus 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 Changchun and Jiangsu Bioperfectus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changchun UP Optotech and Jiangsu Bioperfectus Technologies, you can compare the effects of market volatilities on Changchun and Jiangsu Bioperfectus 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 with a short position of Jiangsu Bioperfectus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and Jiangsu Bioperfectus.

Diversification Opportunities for Changchun and Jiangsu Bioperfectus

0.0

Correlation Coefficient

Changchun  Jiangsu Bioperfectus

Pay attention - limited upside

The 3 months correlation between Changchun and Jiangsu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech and Jiangsu Bioperfectus Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Bioperfectus and Changchun 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 UP Optotech are associated (or correlated) with Jiangsu Bioperfectus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Bioperfectus has no effect on the direction of Changchun i.e., Changchun and Jiangsu Bioperfectus go up and down completely randomly.

Pair Corralation between Changchun and Jiangsu Bioperfectus

Assuming the 90 days trading horizon Changchun UP Optotech is expected to generate 1.42 times more return on investment than Jiangsu Bioperfectus. However, Changchun is 1.42 times more volatile than Jiangsu Bioperfectus Technologies. It trades about 0.24 of its potential returns per unit of risk. Jiangsu Bioperfectus Technologies is currently generating about -0.02 per unit of risk. If you would invest  2,486  in Changchun UP Optotech on September 12, 2024 and sell it today you would earn a total of  1,798  from holding Changchun UP Optotech or generate 72.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Changchun UP Optotech  vs.  Jiangsu Bioperfectus Technolog

Changchun UP Optotech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Changchun UP Optotech are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changchun sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Bioperfectus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Bioperfectus Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangsu Bioperfectus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Changchun and Jiangsu Bioperfectus

The main advantage of trading using opposite Changchun and Jiangsu Bioperfectus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun position performs unexpectedly, Jiangsu Bioperfectus 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 Jiangsu Bioperfectus will offset losses from the drop in Jiangsu Bioperfectus' long position.

The idea behind Changchun UP Optotech and Jiangsu Bioperfectus Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.