Correlation Between Bank of Communications and Ligao Foods
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By analyzing existing cross correlation between Bank of Communications and Ligao Foods CoLtd, you can compare the effects of market volatilities on Bank of Communications and Ligao Foods 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 Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and Ligao Foods.
Diversification Opportunities for Bank of Communications and Ligao Foods
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Ligao is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd 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 Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Bank of Communications i.e., Bank of Communications and Ligao Foods go up and down completely randomly.
Pair Corralation between Bank of Communications and Ligao Foods
Assuming the 90 days trading horizon Bank of Communications is expected to under-perform the Ligao Foods. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Communications is 1.65 times less risky than Ligao Foods. The stock trades about -0.08 of its potential returns per unit of risk. The Ligao Foods CoLtd is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,508 in Ligao Foods CoLtd on November 7, 2024 and sell it today you would earn a total of 516.00 from holding Ligao Foods CoLtd or generate 14.71% 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. Ligao Foods CoLtd
Performance |
| Timeline |
| Bank of Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ligao Foods CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of Communications and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and Ligao Foods
The main advantage of trading using opposite Bank of Communications and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.The idea behind Bank of Communications and Ligao Foods CoLtd 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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