Correlation Between China Baoan and Industrial Bank
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By analyzing existing cross correlation between China Baoan Group and Industrial Bank Co, you can compare the effects of market volatilities on China Baoan and Industrial Bank 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 Baoan with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Baoan and Industrial Bank.
Diversification Opportunities for China Baoan and Industrial Bank
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Industrial is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Baoan Group and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and China Baoan 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 Baoan Group are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of China Baoan i.e., China Baoan and Industrial Bank go up and down completely randomly.
Pair Corralation between China Baoan and Industrial Bank
Assuming the 90 days trading horizon China Baoan Group is expected to under-perform the Industrial Bank. In addition to that, China Baoan is 1.55 times more volatile than Industrial Bank Co. It trades about -0.03 of its total potential returns per unit of risk. Industrial Bank Co is currently generating about 0.05 per unit of volatility. If you would invest 1,578 in Industrial Bank Co on November 7, 2024 and sell it today you would earn a total of 453.00 from holding Industrial Bank Co or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Baoan Group vs. Industrial Bank Co
Performance |
| Timeline |
| China Baoan Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Industrial Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
China Baoan and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Baoan and Industrial Bank
The main advantage of trading using opposite China Baoan and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Baoan position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.The idea behind China Baoan Group and Industrial Bank Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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