Correlation Between Agricultural Bank and Bank of China Ltd ADR
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and Bank of China Ltd ADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Agricultural Bank and Bank of China Ltd ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank and Bank of China, you can compare the effects of market volatilities on Agricultural Bank and Bank of China Ltd ADR 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 Agricultural Bank with a short position of Bank of China Ltd ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Bank of China Ltd ADR.
Diversification Opportunities for Agricultural Bank and Bank of China Ltd ADR
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agricultural and Bank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China Ltd ADR and Agricultural Bank 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 Agricultural Bank are associated (or correlated) with Bank of China Ltd ADR. 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 Ltd ADR has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and Bank of China Ltd ADR go up and down completely randomly.
Pair Corralation between Agricultural Bank and Bank of China Ltd ADR
Assuming the 90 days horizon Agricultural Bank is expected to under-perform the Bank of China Ltd ADR. In addition to that, Agricultural Bank is 1.08 times more volatile than Bank of China. It trades about -0.36 of its total potential returns per unit of risk. Bank of China is currently generating about -0.05 per unit of volatility. If you would invest 1,199 in Bank of China on August 27, 2024 and sell it today you would lose (26.00) from holding Bank of China or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agricultural Bank vs. Bank of China
Performance |
| Timeline |
| Agricultural Bank |
| Bank of China Ltd ADR |
Agricultural Bank and Bank of China Ltd ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and Bank of China Ltd ADR
The main advantage of trading using opposite Agricultural Bank and Bank of China Ltd ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank position performs unexpectedly, Bank of China Ltd ADR 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 Ltd ADR will offset losses from the drop in Bank of China Ltd ADR's long position.| Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
| Bank of China Ltd ADR vs. China Construction Bank | Bank of China Ltd ADR vs. Industrial and Commercial | Bank of China Ltd ADR vs. China Construction Bank | Bank of China Ltd ADR vs. Bank of America |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |