Correlation Between China Everbright and Bank of China
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By analyzing existing cross correlation between China Everbright Bank and Bank of China, you can compare the effects of market volatilities on China Everbright and Bank of China 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 China Everbright with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Everbright and Bank of China.
Diversification Opportunities for China Everbright and Bank of China
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Bank is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Bank and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and China Everbright 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 China Everbright Bank are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of China Everbright i.e., China Everbright and Bank of China go up and down completely randomly.
Pair Corralation between China Everbright and Bank of China
Assuming the 90 days trading horizon China Everbright Bank is expected to generate 1.37 times more return on investment than Bank of China. However, China Everbright is 1.37 times more volatile than Bank of China. It trades about 0.03 of its potential returns per unit of risk. Bank of China is currently generating about -0.1 per unit of risk. If you would invest 383.00 in China Everbright Bank on October 26, 2024 and sell it today you would earn a total of 4.00 from holding China Everbright Bank or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Everbright Bank vs. Bank of China
Performance |
| Timeline |
| China Everbright Bank |
| Bank of China |
China Everbright and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Everbright and Bank of China
The main advantage of trading using opposite China Everbright and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Everbright position performs unexpectedly, Bank of China 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 Bank of China will offset losses from the drop in Bank of China's long position.| China Everbright vs. China Life Insurance | China Everbright vs. Cinda Securities Co | China Everbright vs. Piotech Inc A | China Everbright vs. Dongxing Sec Co |
| Bank of China vs. Harbin Air Conditioning | Bank of China vs. Jinhui Liquor Co | Bank of China vs. MayAir Technology Co | Bank of China vs. Digiwin Software 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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