Correlation Between Hubeiyichang Transportation and Bank of China
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Bank of China, you can compare the effects of market volatilities on Hubeiyichang Transportation and Bank of China 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 Hubeiyichang Transportation with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Bank of China.
Diversification Opportunities for Hubeiyichang Transportation and Bank of China
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hubeiyichang and Bank is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Bank of China go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Bank of China
Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 2.61 times less return on investment than Bank of China. In addition to that, Hubeiyichang Transportation is 1.32 times more volatile than Bank of China. It trades about 0.01 of its total potential returns per unit of risk. Bank of China is currently generating about 0.04 per unit of volatility. If you would invest 429.00 in Bank of China on August 31, 2024 and sell it today you would earn a total of 74.00 from holding Bank of China or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Bank of China
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Bank of China |
Hubeiyichang Transportation and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Bank of China
The main advantage of trading using opposite Hubeiyichang Transportation and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Bank of China 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 Bank of China will offset losses from the drop in Bank of China's long position.The idea behind Hubeiyichang Transportation Group and Bank of China 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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