Correlation Between Bimi International and China Jo

Can any of the company-specific risk be diversified away by investing in both Bimi International and China Jo 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 China Jo 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 China Jo Jo Drugstores, you can compare the effects of market volatilities on Bimi International and China Jo 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 China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bimi International and China Jo.

Diversification Opportunities for Bimi International and China Jo

0.52

Correlation Coefficient

Bimi International  China Jo

Very weak diversification

The 3 months correlation between Bimi and China is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bimi International Medical and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo 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 China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of Bimi International i.e., Bimi International and China Jo go up and down completely randomly.

Pair Corralation between Bimi International and China Jo

Given the investment horizon of 90 days Bimi International Medical is expected to under-perform the China Jo. In addition to that, Bimi International is 1.58 times more volatile than China Jo Jo Drugstores. It trades about -0.11 of its total potential returns per unit of risk. China Jo Jo Drugstores is currently generating about -0.08 per unit of volatility. If you would invest  354.00  in China Jo Jo Drugstores on January 31, 2024 and sell it today you would lose (114.00) from holding China Jo Jo Drugstores or give up 32.2% of portfolio value over 90 days.

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

Bimi International Medical  vs.  China Jo Jo Drugstores

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 uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

China Jo Jo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Jo Jo Drugstores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bimi International and China Jo

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

The idea behind Bimi International Medical and China Jo Jo Drugstores 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.