Correlation Between Bank of China and Guangzhou Automobile
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By analyzing existing cross correlation between Bank of China and Guangzhou Automobile Group, you can compare the effects of market volatilities on Bank of China and Guangzhou Automobile 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 Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Guangzhou Automobile.
Diversification Opportunities for Bank of China and Guangzhou Automobile
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Guangzhou is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile 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 Guangzhou Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Automobile has no effect on the direction of Bank of China i.e., Bank of China and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Bank of China and Guangzhou Automobile
Assuming the 90 days trading horizon Bank of China is expected to generate 0.71 times more return on investment than Guangzhou Automobile. However, Bank of China is 1.42 times less risky than Guangzhou Automobile. It trades about 0.08 of its potential returns per unit of risk. Guangzhou Automobile Group is currently generating about -0.02 per unit of risk. If you would invest 384.00 in Bank of China on September 1, 2024 and sell it today you would earn a total of 117.00 from holding Bank of China or generate 30.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Bank of China |
| Guangzhou Automobile |
Bank of China and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Guangzhou Automobile
The main advantage of trading using opposite Bank of China and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Guangzhou Automobile 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 Guangzhou Automobile will offset losses from the drop in Guangzhou Automobile's long position.| Bank of China vs. China Minmetals Rare | Bank of China vs. China Eastern Airlines | Bank of China vs. Metro Investment Development | Bank of China vs. Cultural Investment Holdings |
| Guangzhou Automobile vs. Anhui Huaren Health | Guangzhou Automobile vs. Shanghai Broadband Technology | Guangzhou Automobile vs. Healthcare Co | Guangzhou Automobile vs. Dezhan HealthCare 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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