Correlation Between Bank of China Limited and Changzhou Evergreen
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By analyzing existing cross correlation between Bank of China and Changzhou Evergreen Technology, you can compare the effects of market volatilities on Bank of China Limited and Changzhou Evergreen 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 Limited with a short position of Changzhou Evergreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China Limited and Changzhou Evergreen.
Diversification Opportunities for Bank of China Limited and Changzhou Evergreen
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Changzhou is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Changzhou Evergreen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changzhou Evergreen and Bank of China Limited 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 Changzhou Evergreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changzhou Evergreen has no effect on the direction of Bank of China Limited i.e., Bank of China Limited and Changzhou Evergreen go up and down completely randomly.
Pair Corralation between Bank of China Limited and Changzhou Evergreen
Assuming the 90 days trading horizon Bank of China Limited is expected to generate 4.37 times less return on investment than Changzhou Evergreen. But when comparing it to its historical volatility, Bank of China is 2.85 times less risky than Changzhou Evergreen. It trades about 0.11 of its potential returns per unit of risk. Changzhou Evergreen Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,766 in Changzhou Evergreen Technology on November 29, 2024 and sell it today you would earn a total of 129.00 from holding Changzhou Evergreen Technology or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Changzhou Evergreen Technology
Performance |
| Timeline |
| Bank of China Limited |
| Changzhou Evergreen |
Bank of China Limited and Changzhou Evergreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China Limited and Changzhou Evergreen
The main advantage of trading using opposite Bank of China Limited and Changzhou Evergreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China Limited position performs unexpectedly, Changzhou Evergreen 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 Changzhou Evergreen will offset losses from the drop in Changzhou Evergreen's long position.The idea behind Bank of China and Changzhou Evergreen Technology 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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