Correlation Between Bank of China and Huizhou Desay
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By analyzing existing cross correlation between Bank of China and Huizhou Desay SV, you can compare the effects of market volatilities on Bank of China and Huizhou Desay 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 Huizhou Desay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Huizhou Desay.
Diversification Opportunities for Bank of China and Huizhou Desay
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Huizhou is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Huizhou Desay SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huizhou Desay SV 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 Huizhou Desay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huizhou Desay SV has no effect on the direction of Bank of China i.e., Bank of China and Huizhou Desay go up and down completely randomly.
Pair Corralation between Bank of China and Huizhou Desay
Assuming the 90 days trading horizon Bank of China is expected to generate 5.77 times less return on investment than Huizhou Desay. But when comparing it to its historical volatility, Bank of China is 1.27 times less risky than Huizhou Desay. It trades about 0.05 of its potential returns per unit of risk. Huizhou Desay SV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 10,102 in Huizhou Desay SV on November 7, 2024 and sell it today you would earn a total of 749.00 from holding Huizhou Desay SV or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Huizhou Desay SV
Performance |
| Timeline |
| Bank of China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Huizhou Desay SV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of China and Huizhou Desay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Huizhou Desay
The main advantage of trading using opposite Bank of China and Huizhou Desay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Huizhou Desay 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 Huizhou Desay will offset losses from the drop in Huizhou Desay's long position.The idea behind Bank of China and Huizhou Desay SV 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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