Correlation Between Bank of China and Ningbo Thermal
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By analyzing existing cross correlation between Bank of China and Ningbo Thermal Power, you can compare the effects of market volatilities on Bank of China and Ningbo Thermal 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 Ningbo Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Ningbo Thermal.
Diversification Opportunities for Bank of China and Ningbo Thermal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Ningbo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Ningbo Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Thermal 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 Ningbo Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Thermal Power has no effect on the direction of Bank of China i.e., Bank of China and Ningbo Thermal go up and down completely randomly.
Pair Corralation between Bank of China and Ningbo Thermal
Assuming the 90 days trading horizon Bank of China is expected to generate 0.75 times more return on investment than Ningbo Thermal. However, Bank of China is 1.34 times less risky than Ningbo Thermal. It trades about 0.35 of its potential returns per unit of risk. Ningbo Thermal Power is currently generating about 0.15 per unit of risk. If you would invest 482.00 in Bank of China on September 14, 2024 and sell it today you would earn a total of 38.00 from holding Bank of China or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Ningbo Thermal Power
Performance |
| Timeline |
| Bank of China |
| Ningbo Thermal Power |
Bank of China and Ningbo Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Ningbo Thermal
The main advantage of trading using opposite Bank of China and Ningbo Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Ningbo Thermal 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 Ningbo Thermal will offset losses from the drop in Ningbo Thermal's long position.| Bank of China vs. Industrial Bank Co | Bank of China vs. GRG Banking Equipment | Bank of China vs. Central Plains Environment | Bank of China vs. Guosheng Financial Holding |
| Ningbo Thermal vs. Bank of China | Ningbo Thermal vs. Kweichow Moutai Co | Ningbo Thermal vs. PetroChina Co Ltd | Ningbo Thermal vs. Bank of Communications |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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