Correlation Between Railway Signal and Bank of China
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By analyzing existing cross correlation between Railway Signal Communication and Bank of China, you can compare the effects of market volatilities on Railway Signal and Bank of China 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 Railway Signal with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Railway Signal and Bank of China.
Diversification Opportunities for Railway Signal and Bank of China
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Railway and Bank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Railway Signal Communication and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and Railway Signal 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 Railway Signal Communication are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of Railway Signal i.e., Railway Signal and Bank of China go up and down completely randomly.
Pair Corralation between Railway Signal and Bank of China
Assuming the 90 days trading horizon Railway Signal is expected to generate 1.44 times less return on investment than Bank of China. In addition to that, Railway Signal is 1.86 times more volatile than Bank of China. It trades about 0.04 of its total potential returns per unit of risk. Bank of China is currently generating about 0.1 per unit of volatility. If you would invest 376.00 in Bank of China on September 26, 2024 and sell it today you would earn a total of 167.00 from holding Bank of China or generate 44.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Railway Signal Communication vs. Bank of China
Performance |
| Timeline |
| Railway Signal Commu |
| Bank of China |
Railway Signal and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Railway Signal and Bank of China
The main advantage of trading using opposite Railway Signal and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Railway Signal position performs unexpectedly, Bank of China 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 Bank of China will offset losses from the drop in Bank of China's long position.| Railway Signal vs. Kweichow Moutai Co | Railway Signal vs. Shenzhen Mindray Bio Medical | Railway Signal vs. Jiangsu Pacific Quartz | Railway Signal vs. G bits Network Technology |
| Bank of China vs. Railway Signal Communication | Bank of China vs. Eastern Communications Co | Bank of China vs. Tongyu Communication | Bank of China vs. Shenzhen Kexin 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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