Correlation Between Bosera ChiNext and Bosera SSE

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

By analyzing existing cross correlation between Bosera ChiNext ETF and Bosera SSE Natural, you can compare the effects of market volatilities on Bosera ChiNext and Bosera SSE 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 Bosera ChiNext with a short position of Bosera SSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosera ChiNext and Bosera SSE.

Diversification Opportunities for Bosera ChiNext and Bosera SSE

0.9

Correlation Coefficient

Bosera ChiNext  Bosera SSE

Almost no diversification

The 3 months correlation between Bosera and Bosera is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bosera ChiNext ETF and Bosera SSE Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosera SSE Natural and Bosera ChiNext 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 Bosera ChiNext ETF are associated (or correlated) with Bosera SSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosera SSE Natural has no effect on the direction of Bosera ChiNext i.e., Bosera ChiNext and Bosera SSE go up and down completely randomly.

Pair Corralation between Bosera ChiNext and Bosera SSE

Assuming the 90 days trading horizon Bosera ChiNext ETF is expected to generate 2.2 times more return on investment than Bosera SSE. However, Bosera ChiNext is 2.2 times more volatile than Bosera SSE Natural. It trades about 0.15 of its potential returns per unit of risk. Bosera SSE Natural is currently generating about 0.1 per unit of risk. If you would invest  144.00  in Bosera ChiNext ETF on September 5, 2024 and sell it today you would earn a total of  63.00  from holding Bosera ChiNext ETF or generate 43.75% return on investment over 90 days.

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

Bosera ChiNext ETF  vs.  Bosera SSE Natural

Bosera ChiNext ETF

Risk-Adjusted Performance

12 of 100

Good

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

Bosera SSE Natural

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera SSE Natural are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosera SSE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bosera ChiNext and Bosera SSE

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

The idea behind Bosera ChiNext ETF and Bosera SSE Natural 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.