Correlation Between Bimi International and PetMed Express

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

Diversification Opportunities for Bimi International and PetMed Express

0.54

Correlation Coefficient

Bimi International  PetMed Express

Very weak diversification

The 3 months correlation between Bimi and PetMed is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bimi International Medical and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Bimi International i.e., Bimi International and PetMed Express go up and down completely randomly.

Pair Corralation between Bimi International and PetMed Express

Given the investment horizon of 90 days Bimi International Medical is expected to under-perform the PetMed Express. In addition to that, Bimi International is 5.6 times more volatile than PetMed Express. It trades about -0.11 of its total potential returns per unit of risk. PetMed Express is currently generating about -0.37 per unit of volatility. If you would invest  468.00  in PetMed Express on January 30, 2024 and sell it today you would lose (66.00) from holding PetMed Express or give up 14.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Bimi International Medical  vs.  PetMed Express

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.

PetMed Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bimi International and PetMed Express

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

The idea behind Bimi International Medical and PetMed Express 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.