Correlation Between Bank of China and ZTE Corp
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By analyzing existing cross correlation between Bank of China and ZTE Corp, you can compare the effects of market volatilities on Bank of China and ZTE Corp 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 China with a short position of ZTE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and ZTE Corp.
Diversification Opportunities for Bank of China and ZTE Corp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and ZTE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and ZTE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corp and Bank of China 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 China are associated (or correlated) with ZTE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corp has no effect on the direction of Bank of China i.e., Bank of China and ZTE Corp go up and down completely randomly.
Pair Corralation between Bank of China and ZTE Corp
Assuming the 90 days trading horizon Bank of China is expected to generate 0.31 times more return on investment than ZTE Corp. However, Bank of China is 3.27 times less risky than ZTE Corp. It trades about 0.19 of its potential returns per unit of risk. ZTE Corp is currently generating about 0.05 per unit of risk. If you would invest 489.00 in Bank of China on September 5, 2024 and sell it today you would earn a total of 20.00 from holding Bank of China or generate 4.09% 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 China vs. ZTE Corp
Performance |
| Timeline |
| Bank of China |
| ZTE Corp |
Bank of China and ZTE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and ZTE Corp
The main advantage of trading using opposite Bank of China and ZTE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, ZTE Corp 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 ZTE Corp will offset losses from the drop in ZTE Corp's long position.| Bank of China vs. Jafron Biomedical Co | Bank of China vs. Dezhan HealthCare Co | Bank of China vs. Ningbo Ligong Online | Bank of China vs. Guangzhou Boji Medical |
| ZTE Corp vs. Industrial and Commercial | ZTE Corp vs. China Construction Bank | ZTE Corp vs. Bank of China | ZTE Corp vs. Agricultural Bank of |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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