Correlation Between Agricultural Bank and Bank of China
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and Bank of China 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 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank of and Bank of China, you can compare the effects of market volatilities on Agricultural Bank 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 Agricultural Bank with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Bank of China.
Diversification Opportunities for Agricultural Bank and Bank of China
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Agricultural and Bank is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of 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 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 of 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 Agricultural Bank i.e., Agricultural Bank and Bank of China go up and down completely randomly.
Pair Corralation between Agricultural Bank and Bank of China
Assuming the 90 days horizon Agricultural Bank of is expected to generate 0.52 times more return on investment than Bank of China. However, Agricultural Bank of is 1.92 times less risky than Bank of China. It trades about -0.1 of its potential returns per unit of risk. Bank of China is currently generating about -0.06 per unit of risk. If you would invest 1,272 in Agricultural Bank of on August 27, 2024 and sell it today you would lose (56.00) from holding Agricultural Bank of or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agricultural Bank of vs. Bank of China
Performance |
| Timeline |
| Agricultural Bank |
| Bank of China |
Agricultural Bank and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and Bank of China
The main advantage of trading using opposite Agricultural Bank and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank 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.| Agricultural Bank vs. ANZ Group Holdings | Agricultural Bank vs. Agricultural Bank | Agricultural Bank vs. Industrial and Commercial | Agricultural Bank vs. Bank of America |
| Bank of China vs. ANZ Group Holdings | Bank of China vs. Agricultural Bank | Bank of China vs. Industrial and Commercial | Bank of China 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |