Correlation Between Bimi International and Babcock Wilcox

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

By analyzing existing cross correlation between Bimi International Medical and Babcock Wilcox Enterprises,, you can compare the effects of market volatilities on Bimi International and Babcock Wilcox 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 Bimi International with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bimi International and Babcock Wilcox.

Diversification Opportunities for Bimi International and Babcock Wilcox

-0.45

Correlation Coefficient

Bimi International  Babcock Wilcox

Very good diversification

The 3 months correlation between Bimi and Babcock is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bimi International Medical and Babcock Wilcox Enterprises, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter and Bimi 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 Bimi International Medical are associated (or correlated) with Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Bimi International i.e., Bimi International and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Bimi International and Babcock Wilcox

If you would invest  2,090  in Babcock Wilcox Enterprises, on September 2, 2024 and sell it today you would earn a total of  319.00  from holding Babcock Wilcox Enterprises, or generate 15.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Bimi International Medical  vs.  Babcock Wilcox Enterprises,

Bimi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bimi International Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Bimi International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Babcock Wilcox Enter

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises, are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Babcock Wilcox displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bimi International and Babcock Wilcox

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

The idea behind Bimi International Medical and Babcock Wilcox Enterprises, 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.