Correlation Between Bank of Zhengzhou and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Bank of Zhengzhou and CHINA HUARONG 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 Bank of Zhengzhou and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Zhengzhou and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Bank of Zhengzhou and CHINA HUARONG 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 Bank of Zhengzhou with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Zhengzhou and CHINA HUARONG.
Diversification Opportunities for Bank of Zhengzhou and CHINA HUARONG
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and CHINA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Zhengzhou and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and Bank of Zhengzhou 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 Bank of Zhengzhou are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Bank of Zhengzhou i.e., Bank of Zhengzhou and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Bank of Zhengzhou and CHINA HUARONG
Assuming the 90 days horizon Bank of Zhengzhou is expected to generate 5.34 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, Bank of Zhengzhou is 5.74 times less risky than CHINA HUARONG. It trades about 0.12 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on November 2, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Zhengzhou vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Bank of Zhengzhou |
| CHINA HUARONG ENERHD |
Bank of Zhengzhou and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Zhengzhou and CHINA HUARONG
The main advantage of trading using opposite Bank of Zhengzhou and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Zhengzhou position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.| Bank of Zhengzhou vs. PT Bank Central | Bank of Zhengzhou vs. DBS Group Holdings | Bank of Zhengzhou vs. State Bank of | Bank of Zhengzhou vs. PT Bank Rakyat |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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