Correlation Between Bimi International and Rite Aid

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

Diversification Opportunities for Bimi International and Rite Aid

0.44

Correlation Coefficient

Bimi International  Rite Aid

Very weak diversification

The 3 months correlation between Bimi and Rite is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bimi International Medical and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Bimi International i.e., Bimi International and Rite Aid go up and down completely randomly.

Pair Corralation between Bimi International and Rite Aid

Given the investment horizon of 90 days Bimi International Medical is expected to generate 0.93 times more return on investment than Rite Aid. However, Bimi International Medical is 1.08 times less risky than Rite Aid. It trades about -0.01 of its potential returns per unit of risk. Rite Aid is currently generating about -0.05 per unit of risk. If you would invest  670.00  in Bimi International Medical on January 31, 2024 and sell it today you would lose (553.00) from holding Bimi International Medical or give up 82.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.78%
Values	Daily Returns

Bimi International Medical  vs.  Rite Aid

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.

Rite Aid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bimi International and Rite Aid

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

The idea behind Bimi International Medical and Rite Aid 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.