Correlation Between Industrial Bank and China Reform
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By analyzing existing cross correlation between Industrial Bank Co and China Reform Health, you can compare the effects of market volatilities on Industrial Bank and China Reform 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 Industrial Bank with a short position of China Reform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and China Reform.
Diversification Opportunities for Industrial Bank and China Reform
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and China is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and China Reform Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reform Health and Industrial Bank 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 Industrial Bank Co are associated (or correlated) with China Reform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reform Health has no effect on the direction of Industrial Bank i.e., Industrial Bank and China Reform go up and down completely randomly.
Pair Corralation between Industrial Bank and China Reform
Assuming the 90 days trading horizon Industrial Bank is expected to generate 2.07 times less return on investment than China Reform. But when comparing it to its historical volatility, Industrial Bank Co is 2.4 times less risky than China Reform. It trades about 0.05 of its potential returns per unit of risk. China Reform Health is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,132 in China Reform Health on September 1, 2024 and sell it today you would earn a total of 285.00 from holding China Reform Health or generate 25.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank Co vs. China Reform Health
Performance |
| Timeline |
| Industrial Bank |
| China Reform Health |
Industrial Bank and China Reform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and China Reform
The main advantage of trading using opposite Industrial Bank and China Reform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, China Reform 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 Reform will offset losses from the drop in China Reform's long position.| Industrial Bank vs. Kweichow Moutai Co | Industrial Bank vs. Shenzhen Mindray Bio Medical | Industrial Bank vs. Jiangsu Pacific Quartz | Industrial Bank vs. G bits Network Technology |
| China Reform vs. Servyou Software Group | China Reform vs. Ping An Insurance | China Reform vs. Dhc Software Co | China Reform vs. Shuhua Sports Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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