Correlation Between CHINA HUARONG and BIORA THERAPEUTNEW

Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and BIORA THERAPEUTNEW 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 CHINA HUARONG and BIORA THERAPEUTNEW into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and BIORA THERAPEUTNEW 001, you can compare the effects of market volatilities on CHINA HUARONG and BIORA THERAPEUTNEW 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 CHINA HUARONG with a short position of BIORA THERAPEUTNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and BIORA THERAPEUTNEW.

Diversification Opportunities for CHINA HUARONG and BIORA THERAPEUTNEW

-0.03

Correlation Coefficient

CHINA HUARONG  BIORA THERAPEUTNEW

Good diversification

The 3 months correlation between CHINA and BIORA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and BIORA THERAPEUTNEW 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIORA THERAPEUTNEW 001 and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with BIORA THERAPEUTNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIORA THERAPEUTNEW 001 has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and BIORA THERAPEUTNEW go up and down completely randomly.

Pair Corralation between CHINA HUARONG and BIORA THERAPEUTNEW

Assuming the 90 days trading horizon CHINA HUARONG is expected to generate 16.72 times less return on investment than BIORA THERAPEUTNEW. But when comparing it to its historical volatility, CHINA HUARONG ENERHD 50 is 8.76 times less risky than BIORA THERAPEUTNEW. It trades about 0.07 of its potential returns per unit of risk. BIORA THERAPEUTNEW 001 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4.36  in BIORA THERAPEUTNEW 001 on September 29, 2024 and sell it today you would earn a total of  505.64  from holding BIORA THERAPEUTNEW 001 or generate 11597.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

CHINA HUARONG ENERHD 50  vs.  BIORA THERAPEUTNEW 001

CHINA HUARONG ENERHD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA HUARONG ENERHD 50 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA HUARONG reported solid returns over the last few months and may actually be approaching a breakup point.

BIORA THERAPEUTNEW 001

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BIORA THERAPEUTNEW 001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, BIORA THERAPEUTNEW reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHINA HUARONG and BIORA THERAPEUTNEW

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

The idea behind CHINA HUARONG ENERHD 50 and BIORA THERAPEUTNEW 001 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 Transaction History module to view history of all your transactions and understand their impact on performance.