Correlation Between Bank of Communications and China Reform
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By analyzing existing cross correlation between Bank of Communications and China Reform Health, you can compare the effects of market volatilities on Bank of Communications 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 Bank of Communications with a short position of China Reform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and China Reform.
Diversification Opportunities for Bank of Communications and China Reform
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and China is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications 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 Bank of Communications 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 Communications 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 Bank of Communications i.e., Bank of Communications and China Reform go up and down completely randomly.
Pair Corralation between Bank of Communications and China Reform
Assuming the 90 days trading horizon Bank of Communications is expected to generate 0.83 times more return on investment than China Reform. However, Bank of Communications is 1.21 times less risky than China Reform. It trades about -0.08 of its potential returns per unit of risk. China Reform Health is currently generating about -0.09 per unit of risk. If you would invest 741.00 in Bank of Communications on November 7, 2024 and sell it today you would lose (16.00) from holding Bank of Communications or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Communications vs. China Reform Health
Performance |
| Timeline |
| Bank of Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Reform Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of Communications and China Reform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and China Reform
The main advantage of trading using opposite Bank of Communications and China Reform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications 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.The idea behind Bank of Communications and China Reform Health 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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