Correlation Between Bank of China and Hengdian Entertainment
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By analyzing existing cross correlation between Bank of China and Hengdian Entertainment Co, you can compare the effects of market volatilities on Bank of China and Hengdian Entertainment 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 Hengdian Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Hengdian Entertainment.
Diversification Opportunities for Bank of China and Hengdian Entertainment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Hengdian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Hengdian Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengdian Entertainment 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 Hengdian Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengdian Entertainment has no effect on the direction of Bank of China i.e., Bank of China and Hengdian Entertainment go up and down completely randomly.
Pair Corralation between Bank of China and Hengdian Entertainment
Assuming the 90 days trading horizon Bank of China is expected to under-perform the Hengdian Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Bank of China is 3.75 times less risky than Hengdian Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Hengdian Entertainment Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,178 in Hengdian Entertainment Co on August 25, 2024 and sell it today you would earn a total of 153.00 from holding Hengdian Entertainment Co or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of China vs. Hengdian Entertainment Co
Performance |
| Timeline |
| Bank of China |
| Hengdian Entertainment |
Bank of China and Hengdian Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Hengdian Entertainment
The main advantage of trading using opposite Bank of China and Hengdian Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Hengdian Entertainment 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 Hengdian Entertainment will offset losses from the drop in Hengdian Entertainment's long position.| Bank of China vs. Sinofibers Technology Co | Bank of China vs. Beijing Kaiwen Education | Bank of China vs. HanS Laser Tech | Bank of China vs. Tianshui Huatian Technology |
| Hengdian Entertainment vs. Agricultural Bank of | Hengdian Entertainment vs. Industrial and Commercial | Hengdian Entertainment vs. Bank of China | Hengdian Entertainment vs. PetroChina Co Ltd |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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