Correlation Between Shenzhen Bioeasy and Bloomage Biotechnology

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

By analyzing existing cross correlation between Shenzhen Bioeasy Biotechnology and Bloomage Biotechnology Corp, you can compare the effects of market volatilities on Shenzhen Bioeasy and Bloomage Biotechnology 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 Shenzhen Bioeasy with a short position of Bloomage Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bioeasy and Bloomage Biotechnology.

Diversification Opportunities for Shenzhen Bioeasy and Bloomage Biotechnology

0.76

Correlation Coefficient

Shenzhen Bioeasy  Bloomage Biotechnology

Poor diversification

The 3 months correlation between Shenzhen and Bloomage is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and Bloomage Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomage Biotechnology and Shenzhen Bioeasy 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 Shenzhen Bioeasy Biotechnology are associated (or correlated) with Bloomage Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomage Biotechnology has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and Bloomage Biotechnology go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and Bloomage Biotechnology

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to generate 1.03 times more return on investment than Bloomage Biotechnology. However, Shenzhen Bioeasy is 1.03 times more volatile than Bloomage Biotechnology Corp. It trades about 0.16 of its potential returns per unit of risk. Bloomage Biotechnology Corp is currently generating about 0.09 per unit of risk. If you would invest  666.00  in Shenzhen Bioeasy Biotechnology on September 3, 2024 and sell it today you would earn a total of  322.00  from holding Shenzhen Bioeasy Biotechnology or generate 48.35% return on investment over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  Bloomage Biotechnology Corp

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

12 of 100

Good

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

Bloomage Biotechnology

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Shenzhen Bioeasy and Bloomage Biotechnology

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

The idea behind Shenzhen Bioeasy Biotechnology and Bloomage Biotechnology Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.