Correlation Between Apple and Bank of China Limited
Can any of the company-specific risk be diversified away by investing in both Apple and Bank of China Limited 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 Apple and Bank of China Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Bank of China, you can compare the effects of market volatilities on Apple and Bank of China Limited 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 Apple with a short position of Bank of China Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Bank of China Limited.
Diversification Opportunities for Apple and Bank of China Limited
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Bank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China Limited and Apple 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 Apple Inc are associated (or correlated) with Bank of China Limited. 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 Limited has no effect on the direction of Apple i.e., Apple and Bank of China Limited go up and down completely randomly.
Pair Corralation between Apple and Bank of China Limited
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.66 times more return on investment than Bank of China Limited. However, Apple Inc is 1.51 times less risky than Bank of China Limited. It trades about 0.06 of its potential returns per unit of risk. Bank of China is currently generating about 0.01 per unit of risk. If you would invest 21,579 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 331.00 from holding Apple Inc or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Bank of China
Performance |
| Timeline |
| Apple Inc |
| Bank of China Limited |
Apple and Bank of China Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Bank of China Limited
The main advantage of trading using opposite Apple and Bank of China Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Bank of China Limited 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 Limited will offset losses from the drop in Bank of China Limited's long position.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
| Bank of China Limited vs. Superior Plus Corp | Bank of China Limited vs. NMI Holdings | Bank of China Limited vs. Origin Agritech | Bank of China Limited vs. SIVERS SEMICONDUCTORS AB |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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