Correlation Between Bank of China and Shantui Construction
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By analyzing existing cross correlation between Bank of China and Shantui Construction Machinery, you can compare the effects of market volatilities on Bank of China and Shantui Construction 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 Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Shantui Construction.
Diversification Opportunities for Bank of China and Shantui Construction
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Shantui is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction 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 Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Bank of China i.e., Bank of China and Shantui Construction go up and down completely randomly.
Pair Corralation between Bank of China and Shantui Construction
Assuming the 90 days trading horizon Bank of China is expected to generate 2.32 times less return on investment than Shantui Construction. But when comparing it to its historical volatility, Bank of China is 3.2 times less risky than Shantui Construction. It trades about 0.19 of its potential returns per unit of risk. Shantui Construction Machinery is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 978.00 in Shantui Construction Machinery on September 5, 2024 and sell it today you would earn a total of 87.00 from holding Shantui Construction Machinery or generate 8.9% 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. Shantui Construction Machinery
Performance |
| Timeline |
| Bank of China |
| Shantui Construction |
Bank of China and Shantui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Shantui Construction
The main advantage of trading using opposite Bank of China and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction'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 |
| Shantui Construction vs. Qtone Education Group | Shantui Construction vs. Leyard Optoelectronic | Shantui Construction vs. TongFu Microelectronics Co | Shantui Construction vs. Kunshan Guoli Electronic |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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