Correlation Between Bank of China and Linzhou Heavy
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By analyzing existing cross correlation between Bank of China and Linzhou Heavy Machinery, you can compare the effects of market volatilities on Bank of China and Linzhou Heavy 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 Linzhou Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Linzhou Heavy.
Diversification Opportunities for Bank of China and Linzhou Heavy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Linzhou is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Linzhou Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linzhou Heavy Machinery 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 Linzhou Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linzhou Heavy Machinery has no effect on the direction of Bank of China i.e., Bank of China and Linzhou Heavy go up and down completely randomly.
Pair Corralation between Bank of China and Linzhou Heavy
Assuming the 90 days trading horizon Bank of China is expected to generate 0.41 times more return on investment than Linzhou Heavy. However, Bank of China is 2.44 times less risky than Linzhou Heavy. It trades about 0.09 of its potential returns per unit of risk. Linzhou Heavy Machinery is currently generating about 0.02 per unit of risk. If you would invest 399.00 in Bank of China on September 12, 2024 and sell it today you would earn a total of 122.00 from holding Bank of China or generate 30.58% 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. Linzhou Heavy Machinery
Performance |
| Timeline |
| Bank of China |
| Linzhou Heavy Machinery |
Bank of China and Linzhou Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Linzhou Heavy
The main advantage of trading using opposite Bank of China and Linzhou Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Linzhou Heavy 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 Linzhou Heavy will offset losses from the drop in Linzhou Heavy'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 |
| Linzhou Heavy vs. Agricultural Bank of | Linzhou Heavy vs. Industrial and Commercial | Linzhou Heavy vs. Bank of China | Linzhou Heavy vs. PetroChina Co Ltd |
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 CEOs Directory module to screen CEOs from public companies around the world.
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