Correlation Between Bank of Communications and Shandong Hongchuang
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By analyzing existing cross correlation between Bank of Communications and Shandong Hongchuang Aluminum, you can compare the effects of market volatilities on Bank of Communications and Shandong Hongchuang 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 Shandong Hongchuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and Shandong Hongchuang.
Diversification Opportunities for Bank of Communications and Shandong Hongchuang
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Shandong is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Shandong Hongchuang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hongchuang 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 Shandong Hongchuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hongchuang has no effect on the direction of Bank of Communications i.e., Bank of Communications and Shandong Hongchuang go up and down completely randomly.
Pair Corralation between Bank of Communications and Shandong Hongchuang
Assuming the 90 days trading horizon Bank of Communications is expected to under-perform the Shandong Hongchuang. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Communications is 1.92 times less risky than Shandong Hongchuang. The stock trades about 0.0 of its potential returns per unit of risk. The Shandong Hongchuang Aluminum is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 506.00 in Shandong Hongchuang Aluminum on October 16, 2024 and sell it today you would earn a total of 481.00 from holding Shandong Hongchuang Aluminum or generate 95.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.17% |
| Values | Daily Returns |
Bank of Communications vs. Shandong Hongchuang Aluminum
Performance |
| Timeline |
| Bank of Communications |
| Shandong Hongchuang |
Bank of Communications and Shandong Hongchuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and Shandong Hongchuang
The main advantage of trading using opposite Bank of Communications and Shandong Hongchuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications position performs unexpectedly, Shandong Hongchuang 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 Shandong Hongchuang will offset losses from the drop in Shandong Hongchuang's long position.The idea behind Bank of Communications and Shandong Hongchuang Aluminum 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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