Correlation Between Bank of China and China Petroleum
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By analyzing existing cross correlation between Bank of China and China Petroleum Chemical, you can compare the effects of market volatilities on Bank of China and China Petroleum 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 China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and China Petroleum.
Diversification Opportunities for Bank of China and China Petroleum
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical 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 China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Bank of China i.e., Bank of China and China Petroleum go up and down completely randomly.
Pair Corralation between Bank of China and China Petroleum
Assuming the 90 days trading horizon Bank of China is expected to generate 0.86 times more return on investment than China Petroleum. However, Bank of China is 1.16 times less risky than China Petroleum. It trades about 0.1 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about -0.05 per unit of risk. If you would invest 476.00 in Bank of China on November 2, 2024 and sell it today you would earn a total of 69.00 from holding Bank of China or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. China Petroleum Chemical
Performance |
| Timeline |
| Bank of China |
| China Petroleum Chemical |
Bank of China and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and China Petroleum
The main advantage of trading using opposite Bank of China and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.| Bank of China vs. Jilin Jlu Communication | Bank of China vs. Offshore Oil Engineering | Bank of China vs. Fiberhome Telecommunication Technologies | Bank of China vs. Chongqing Brewery Co |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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