Correlation Between Bank of Communications and Beijing Enlight
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By analyzing existing cross correlation between Bank of Communications and Beijing Enlight Media, you can compare the effects of market volatilities on Bank of Communications and Beijing Enlight 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 Beijing Enlight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and Beijing Enlight.
Diversification Opportunities for Bank of Communications and Beijing Enlight
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Beijing is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Beijing Enlight Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enlight Media 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 Beijing Enlight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enlight Media has no effect on the direction of Bank of Communications i.e., Bank of Communications and Beijing Enlight go up and down completely randomly.
Pair Corralation between Bank of Communications and Beijing Enlight
Assuming the 90 days trading horizon Bank of Communications is expected to generate 0.68 times more return on investment than Beijing Enlight. However, Bank of Communications is 1.47 times less risky than Beijing Enlight. It trades about 0.02 of its potential returns per unit of risk. Beijing Enlight Media is currently generating about -0.25 per unit of risk. If you would invest 750.00 in Bank of Communications on October 11, 2024 and sell it today you would earn a total of 2.00 from holding Bank of Communications or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Communications vs. Beijing Enlight Media
Performance |
| Timeline |
| Bank of Communications |
| Beijing Enlight Media |
Bank of Communications and Beijing Enlight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and Beijing Enlight
The main advantage of trading using opposite Bank of Communications and Beijing Enlight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications position performs unexpectedly, Beijing Enlight 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 Beijing Enlight will offset losses from the drop in Beijing Enlight's long position.The idea behind Bank of Communications and Beijing Enlight Media 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.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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