Correlation Between China Express and Bank of Communications
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By analyzing existing cross correlation between China Express Airlines and Bank of Communications, you can compare the effects of market volatilities on China Express and Bank of Communications 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 Express with a short position of Bank of Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Express and Bank of Communications.
Diversification Opportunities for China Express and Bank of Communications
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Bank is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Express Airlines and Bank of Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Communications and China Express 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 Express Airlines are associated (or correlated) with Bank of Communications. 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 Communications has no effect on the direction of China Express i.e., China Express and Bank of Communications go up and down completely randomly.
Pair Corralation between China Express and Bank of Communications
Assuming the 90 days trading horizon China Express Airlines is expected to under-perform the Bank of Communications. In addition to that, China Express is 1.96 times more volatile than Bank of Communications. It trades about -0.02 of its total potential returns per unit of risk. Bank of Communications is currently generating about 0.08 per unit of volatility. If you would invest 444.00 in Bank of Communications on August 24, 2024 and sell it today you would earn a total of 264.00 from holding Bank of Communications or generate 59.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Express Airlines vs. Bank of Communications
Performance |
| Timeline |
| China Express Airlines |
| Bank of Communications |
China Express and Bank of Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Express and Bank of Communications
The main advantage of trading using opposite China Express and Bank of Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Express position performs unexpectedly, Bank of Communications 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 Communications will offset losses from the drop in Bank of Communications' long position.| China Express vs. China Reform Health | China Express vs. PKU HealthCare Corp | China Express vs. Meinian Onehealth Healthcare | China Express vs. ChengDu Hi Tech Development |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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