Correlation Between Zhuhai Bojay and Industrial

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

By analyzing existing cross correlation between Zhuhai Bojay Electronics and Industrial and Commercial, you can compare the effects of market volatilities on Zhuhai Bojay and Industrial 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 Zhuhai Bojay with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Bojay and Industrial.

Diversification Opportunities for Zhuhai Bojay and Industrial

0.64

Correlation Coefficient

Zhuhai Bojay  Industrial

Poor diversification

The 3 months correlation between Zhuhai and Industrial is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Bojay Electronics and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Zhuhai Bojay 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 Zhuhai Bojay Electronics are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Zhuhai Bojay i.e., Zhuhai Bojay and Industrial go up and down completely randomly.

Pair Corralation between Zhuhai Bojay and Industrial

Assuming the 90 days trading horizon Zhuhai Bojay Electronics is expected to under-perform the Industrial. In addition to that, Zhuhai Bojay is 3.25 times more volatile than Industrial and Commercial. It trades about 0.0 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.34 per unit of volatility. If you would invest  607.00  in Industrial and Commercial on September 24, 2024 and sell it today you would earn a total of  46.00  from holding Industrial and Commercial or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Zhuhai Bojay Electronics  vs.  Industrial and Commercial

Zhuhai Bojay Electronics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuhai Bojay Electronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuhai Bojay sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrial and Commercial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zhuhai Bojay and Industrial

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

The idea behind Zhuhai Bojay Electronics and Industrial and Commercial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.