Correlation Between Baolong International and Champion Building

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

By analyzing existing cross correlation between Baolong International Co and Champion Building Materials, you can compare the effects of market volatilities on Baolong International and Champion Building 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 Baolong International with a short position of Champion Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baolong International and Champion Building.

Diversification Opportunities for Baolong International and Champion Building

0.27

Correlation Coefficient

Baolong International  Champion Building

Modest diversification

The 3 months correlation between Baolong and Champion is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Baolong International Co and Champion Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Building and Baolong International 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 Baolong International Co are associated (or correlated) with Champion Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Building has no effect on the direction of Baolong International i.e., Baolong International and Champion Building go up and down completely randomly.

Pair Corralation between Baolong International and Champion Building

Assuming the 90 days trading horizon Baolong International Co is expected to under-perform the Champion Building. But the stock apears to be less risky and, when comparing its historical volatility, Baolong International Co is 1.87 times less risky than Champion Building. The stock trades about -0.1 of its potential returns per unit of risk. The Champion Building Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Champion Building Materials on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Champion Building Materials or generate 3.47% return on investment over 90 days.

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

Baolong International Co  vs.  Champion Building Materials

Baolong International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baolong International Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Baolong International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Champion Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Baolong International and Champion Building

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

The idea behind Baolong International Co and Champion Building Materials 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.