Correlation Between Bank of China and Xiamen Bank
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By analyzing existing cross correlation between Bank of China and Xiamen Bank Co, you can compare the effects of market volatilities on Bank of China and Xiamen Bank 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 Xiamen Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Xiamen Bank.
Diversification Opportunities for Bank of China and Xiamen Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Xiamen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Xiamen Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Bank 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 Xiamen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Bank has no effect on the direction of Bank of China i.e., Bank of China and Xiamen Bank go up and down completely randomly.
Pair Corralation between Bank of China and Xiamen Bank
Assuming the 90 days trading horizon Bank of China is expected to generate 2.34 times less return on investment than Xiamen Bank. But when comparing it to its historical volatility, Bank of China is 1.89 times less risky than Xiamen Bank. It trades about 0.18 of its potential returns per unit of risk. Xiamen Bank Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 511.00 in Xiamen Bank Co on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Xiamen Bank Co or generate 8.81% 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. Xiamen Bank Co
Performance |
| Timeline |
| Bank of China |
| Xiamen Bank |
Bank of China and Xiamen Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Xiamen Bank
The main advantage of trading using opposite Bank of China and Xiamen Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Xiamen Bank 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 Xiamen Bank will offset losses from the drop in Xiamen Bank's long position.| Bank of China vs. Tianjin Hi Tech Development | Bank of China vs. Dazhong Transportation Group | Bank of China vs. Hubeiyichang Transportation Group | Bank of China vs. Guangdong Shenglu Telecommunication |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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