Correlation Between Bank of China and Guangdong Electric
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By analyzing existing cross correlation between Bank of China and Guangdong Electric Power, you can compare the effects of market volatilities on Bank of China and Guangdong Electric 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 Guangdong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Guangdong Electric.
Diversification Opportunities for Bank of China and Guangdong Electric
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Guangdong is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Guangdong Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Electric Power 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 Guangdong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Electric Power has no effect on the direction of Bank of China i.e., Bank of China and Guangdong Electric go up and down completely randomly.
Pair Corralation between Bank of China and Guangdong Electric
Assuming the 90 days trading horizon Bank of China is expected to generate 1.45 times more return on investment than Guangdong Electric. However, Bank of China is 1.45 times more volatile than Guangdong Electric Power. It trades about 0.09 of its potential returns per unit of risk. Guangdong Electric Power is currently generating about -0.01 per unit of risk. If you would invest 304.00 in Bank of China on October 15, 2024 and sell it today you would earn a total of 241.00 from holding Bank of China or generate 79.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Guangdong Electric Power
Performance |
| Timeline |
| Bank of China |
| Guangdong Electric Power |
Bank of China and Guangdong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Guangdong Electric
The main advantage of trading using opposite Bank of China and Guangdong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Guangdong Electric 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 Guangdong Electric will offset losses from the drop in Guangdong Electric's long position.| Bank of China vs. CGN Nuclear Technology | Bank of China vs. Sinofibers Technology Co | Bank of China vs. Easyhome New Retail | Bank of China vs. Linewell Software Co |
| Guangdong Electric vs. Everdisplay Optronics Shanghai | Guangdong Electric vs. Lontium Semiconductor Corp | Guangdong Electric vs. GRINM Semiconductor Materials | Guangdong Electric vs. Chongqing Brewery Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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