Correlation Between Bank of China and Chahua Modern
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By analyzing existing cross correlation between Bank of China and Chahua Modern Housewares, you can compare the effects of market volatilities on Bank of China and Chahua Modern 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 Chahua Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Chahua Modern.
Diversification Opportunities for Bank of China and Chahua Modern
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Chahua is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Chahua Modern Housewares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chahua Modern Housewares 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 Chahua Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chahua Modern Housewares has no effect on the direction of Bank of China i.e., Bank of China and Chahua Modern go up and down completely randomly.
Pair Corralation between Bank of China and Chahua Modern
Assuming the 90 days trading horizon Bank of China is expected to generate 3.83 times less return on investment than Chahua Modern. But when comparing it to its historical volatility, Bank of China is 2.73 times less risky than Chahua Modern. It trades about 0.09 of its potential returns per unit of risk. Chahua Modern Housewares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,205 in Chahua Modern Housewares on September 13, 2024 and sell it today you would earn a total of 809.00 from holding Chahua Modern Housewares or generate 67.14% 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. Chahua Modern Housewares
Performance |
| Timeline |
| Bank of China |
| Chahua Modern Housewares |
Bank of China and Chahua Modern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and Chahua Modern
The main advantage of trading using opposite Bank of China and Chahua Modern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Chahua Modern 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 Chahua Modern will offset losses from the drop in Chahua Modern's long position.| Bank of China vs. AUPU Home Style | Bank of China vs. HaiXin Foods Co | Bank of China vs. JuneYao Dairy Co | Bank of China vs. Zhengzhou Qianweiyangchu Food |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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