Correlation Between Bank of China and China Railway
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By analyzing existing cross correlation between Bank of China and China Railway Materials, you can compare the effects of market volatilities on Bank of China and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and China Railway.
Diversification Opportunities for Bank of China and China Railway
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and China is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and China Railway Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Materials 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Materials has no effect on the direction of Bank of China i.e., Bank of China and China Railway go up and down completely randomly.
Pair Corralation between Bank of China and China Railway
Assuming the 90 days trading horizon Bank of China is expected to generate 0.63 times more return on investment than China Railway. However, Bank of China is 1.59 times less risky than China Railway. It trades about 0.38 of its potential returns per unit of risk. China Railway Materials is currently generating about 0.04 per unit of risk. If you would invest 481.00 in Bank of China on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Bank of China or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. China Railway Materials
Performance |
| Timeline |
| Bank of China |
| China Railway Materials |
Bank of China and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and China Railway
The main advantage of trading using opposite Bank of China and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| Bank of China vs. Chenzhou Jingui Silver | Bank of China vs. Hangzhou Pinming Software | Bank of China vs. Shandong Mining Machinery | Bank of China vs. Tibet Huayu Mining |
| China Railway vs. Lutian Machinery Co | China Railway vs. PetroChina Co Ltd | China Railway vs. Bank of China | China Railway vs. Gansu Jiu Steel |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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