Correlation Between Bank of China and China Construction
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By analyzing existing cross correlation between Bank of China and China Construction Bank, you can compare the effects of market volatilities on Bank of China and China Construction 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 Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and China Construction.
Diversification Opportunities for Bank of China and China Construction
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and China is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction 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 China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Bank of China i.e., Bank of China and China Construction go up and down completely randomly.
Pair Corralation between Bank of China and China Construction
Assuming the 90 days trading horizon Bank of China is expected to generate 0.97 times more return on investment than China Construction. However, Bank of China is 1.03 times less risky than China Construction. It trades about 0.1 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.08 per unit of risk. If you would invest 410.00 in Bank of China on October 20, 2024 and sell it today you would earn a total of 135.00 from holding Bank of China or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. China Construction Bank
Performance |
| Timeline |
| Bank of China |
| China Construction Bank |
Bank of China and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and China Construction
The main advantage of trading using opposite Bank of China and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, China Construction 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 Construction will offset losses from the drop in China Construction's long position.| Bank of China vs. Great Sun Foods Co | Bank of China vs. China Eastern Airlines | Bank of China vs. Eastroc Beverage Group | Bank of China vs. Zhengzhou Coal Mining |
| China Construction vs. Hengli Petrochemical Co | China Construction vs. Maoming Petro Chemical Shihua | China Construction vs. Jinsanjiang Silicon Material | China Construction vs. Wuhan Yangtze Communication |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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