Correlation Between Huaxia Eye and Bank of China
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By analyzing existing cross correlation between Huaxia Eye Hospital and Bank of China, you can compare the effects of market volatilities on Huaxia Eye 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 Huaxia Eye with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaxia Eye and Bank of China.
Diversification Opportunities for Huaxia Eye and Bank of China
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Huaxia and Bank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Huaxia Eye Hospital 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 Huaxia Eye 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 Huaxia Eye Hospital 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 Huaxia Eye i.e., Huaxia Eye and Bank of China go up and down completely randomly.
Pair Corralation between Huaxia Eye and Bank of China
Assuming the 90 days trading horizon Huaxia Eye Hospital is expected to under-perform the Bank of China. But the stock apears to be less risky and, when comparing its historical volatility, Huaxia Eye Hospital is 1.47 times less risky than Bank of China. The stock trades about -0.17 of its potential returns per unit of risk. The Bank of China is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 539.00 in Bank of China on November 7, 2024 and sell it today you would earn a total of 6.00 from holding Bank of China or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaxia Eye Hospital vs. Bank of China
Performance |
| Timeline |
| Huaxia Eye Hospital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bank of China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Huaxia Eye and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaxia Eye and Bank of China
The main advantage of trading using opposite Huaxia Eye and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaxia Eye 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 Huaxia Eye Hospital 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.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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