Correlation Between Bank of China and Dongjiang Environmental
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By analyzing existing cross correlation between Bank of China and Dongjiang Environmental Co, you can compare the effects of market volatilities on Bank of China and Dongjiang Environmental 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 Dongjiang Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Dongjiang Environmental.
Diversification Opportunities for Bank of China and Dongjiang Environmental
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Dongjiang is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Dongjiang Environmental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongjiang Environmental 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 Dongjiang Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongjiang Environmental has no effect on the direction of Bank of China i.e., Bank of China and Dongjiang Environmental go up and down completely randomly.
Pair Corralation between Bank of China and Dongjiang Environmental
Assuming the 90 days trading horizon Bank of China is expected to generate 0.89 times more return on investment than Dongjiang Environmental. However, Bank of China is 1.13 times less risky than Dongjiang Environmental. It trades about 0.05 of its potential returns per unit of risk. Dongjiang Environmental Co is currently generating about -0.08 per unit of risk. If you would invest 539.00 in Bank of China on November 7, 2024 and sell it today you would earn a total of 6.00 from holding Bank of China or generate 1.11% 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. Dongjiang Environmental Co
Performance |
| Timeline |
| Bank of China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Dongjiang Environmental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of China and Dongjiang Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Dongjiang Environmental
The main advantage of trading using opposite Bank of China and Dongjiang Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Dongjiang Environmental 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 Dongjiang Environmental will offset losses from the drop in Dongjiang Environmental's long position.The idea behind Bank of China and Dongjiang Environmental Co 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.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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