Correlation Between Alumina Limited and Bank of China Ltd H
Can any of the company-specific risk be diversified away by investing in both Alumina Limited and Bank of China Ltd H 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 Alumina Limited and Bank of China Ltd H into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumina Limited PK and Bank of China, you can compare the effects of market volatilities on Alumina Limited and Bank of China Ltd H 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 Alumina Limited with a short position of Bank of China Ltd H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina Limited and Bank of China Ltd H.
Diversification Opportunities for Alumina Limited and Bank of China Ltd H
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alumina and Bank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited PK 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 H and Alumina Limited 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 Alumina Limited PK are associated (or correlated) with Bank of China Ltd H. 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 H has no effect on the direction of Alumina Limited i.e., Alumina Limited and Bank of China Ltd H go up and down completely randomly.
Pair Corralation between Alumina Limited and Bank of China Ltd H
If you would invest 48.00 in Bank of China on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Bank of China or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Alumina Limited PK vs. Bank of China
Performance |
| Timeline |
| Alumina Limited PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bank of China Ltd H |
Alumina Limited and Bank of China Ltd H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumina Limited and Bank of China Ltd H
The main advantage of trading using opposite Alumina Limited and Bank of China Ltd H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumina Limited position performs unexpectedly, Bank of China Ltd H 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 H will offset losses from the drop in Bank of China Ltd H's long position.| Alumina Limited vs. Anhui Conch Cement | Alumina Limited vs. Asahi Kaisei Corp | Alumina Limited vs. Covestro ADR |
| Bank of China Ltd H vs. Bank of America | Bank of China Ltd H vs. Bank of America | Bank of China Ltd H vs. Bank of America | Bank of China Ltd H vs. China Construction Bank |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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