Correlation Between Bank of China and Guangxi Wuzhou
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By analyzing existing cross correlation between Bank of China and Guangxi Wuzhou Communications, you can compare the effects of market volatilities on Bank of China and Guangxi Wuzhou 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 Guangxi Wuzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Guangxi Wuzhou.
Diversification Opportunities for Bank of China and Guangxi Wuzhou
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Guangxi is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Guangxi Wuzhou Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Wuzhou Commu 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 Guangxi Wuzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Wuzhou Commu has no effect on the direction of Bank of China i.e., Bank of China and Guangxi Wuzhou go up and down completely randomly.
Pair Corralation between Bank of China and Guangxi Wuzhou
Assuming the 90 days trading horizon Bank of China is expected to generate 0.61 times more return on investment than Guangxi Wuzhou. However, Bank of China is 1.64 times less risky than Guangxi Wuzhou. It trades about 0.05 of its potential returns per unit of risk. Guangxi Wuzhou Communications is currently generating about -0.09 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Guangxi Wuzhou Communications
Performance |
| Timeline |
| Bank of China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Guangxi Wuzhou Commu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Bank of China and Guangxi Wuzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Guangxi Wuzhou
The main advantage of trading using opposite Bank of China and Guangxi Wuzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Guangxi Wuzhou 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 Guangxi Wuzhou will offset losses from the drop in Guangxi Wuzhou's long position.The idea behind Bank of China and Guangxi Wuzhou Communications 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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