Correlation Between Postal Savings and Zhuhai Bojay

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

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

Diversification Opportunities for Postal Savings and Zhuhai Bojay

0.61

Correlation Coefficient

Postal Savings  Zhuhai Bojay

Poor diversification

The 3 months correlation between Postal and Zhuhai is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Zhuhai Bojay Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuhai Bojay Electronics and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Zhuhai Bojay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuhai Bojay Electronics has no effect on the direction of Postal Savings i.e., Postal Savings and Zhuhai Bojay go up and down completely randomly.

Pair Corralation between Postal Savings and Zhuhai Bojay

Assuming the 90 days trading horizon Postal Savings Bank is expected to generate 0.34 times more return on investment than Zhuhai Bojay. However, Postal Savings Bank is 2.93 times less risky than Zhuhai Bojay. It trades about 0.17 of its potential returns per unit of risk. Zhuhai Bojay Electronics is currently generating about 0.05 per unit of risk. If you would invest  520.00  in Postal Savings Bank on September 23, 2024 and sell it today you would earn a total of  22.00  from holding Postal Savings Bank or generate 4.23% return on investment over 90 days.

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

Postal Savings Bank  vs.  Zhuhai Bojay Electronics

Postal Savings Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Postal Savings sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhuhai Bojay Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuhai Bojay Electronics are ranked lower than 13 (%) 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.

Pair Trading with Postal Savings and Zhuhai Bojay

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

The idea behind Postal Savings Bank and Zhuhai Bojay Electronics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.