Correlation Between Bich Chi and Century Synthetic

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

By analyzing existing cross correlation between Bich Chi Food and Century Synthetic Fiber, you can compare the effects of market volatilities on Bich Chi and Century Synthetic 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 Bich Chi with a short position of Century Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bich Chi and Century Synthetic.

Diversification Opportunities for Bich Chi and Century Synthetic

-0.74

Correlation Coefficient

Bich Chi  Century Synthetic

Pay attention - limited upside

The 3 months correlation between Bich and Century is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bich Chi Food and Century Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Synthetic Fiber and Bich Chi 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 Bich Chi Food are associated (or correlated) with Century Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Synthetic Fiber has no effect on the direction of Bich Chi i.e., Bich Chi and Century Synthetic go up and down completely randomly.

Pair Corralation between Bich Chi and Century Synthetic

Assuming the 90 days trading horizon Bich Chi Food is expected to generate 3.59 times more return on investment than Century Synthetic. However, Bich Chi is 3.59 times more volatile than Century Synthetic Fiber. It trades about 0.14 of its potential returns per unit of risk. Century Synthetic Fiber is currently generating about -0.13 per unit of risk. If you would invest  3,640,000  in Bich Chi Food on September 29, 2024 and sell it today you would earn a total of  510,000  from holding Bich Chi Food or generate 14.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	52.31%
Values	Daily Returns

Bich Chi Food  vs.  Century Synthetic Fiber

Bich Chi Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bich Chi Food are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Bich Chi displayed solid returns over the last few months and may actually be approaching a breakup point.

Century Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bich Chi and Century Synthetic

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

The idea behind Bich Chi Food and Century Synthetic Fiber 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.