Correlation Between Bank of America and Chenming Mold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Chenming Mold 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 Bank of America and Chenming Mold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Chenming Mold Industrial, you can compare the effects of market volatilities on Bank of America and Chenming Mold 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 Bank of America with a short position of Chenming Mold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Chenming Mold.
Diversification Opportunities for Bank of America and Chenming Mold
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Chenming is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Chenming Mold Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenming Mold Industrial and Bank of America 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 Bank of America are associated (or correlated) with Chenming Mold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenming Mold Industrial has no effect on the direction of Bank of America i.e., Bank of America and Chenming Mold go up and down completely randomly.
Pair Corralation between Bank of America and Chenming Mold
Considering the 90-day investment horizon Bank of America is expected to generate 5.01 times less return on investment than Chenming Mold. But when comparing it to its historical volatility, Bank of America is 2.63 times less risky than Chenming Mold. It trades about 0.06 of its potential returns per unit of risk. Chenming Mold Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,205 in Chenming Mold Industrial on November 28, 2024 and sell it today you would earn a total of 12,745 from holding Chenming Mold Industrial or generate 578.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.77% |
| Values | Daily Returns |
Bank of America vs. Chenming Mold Industrial
Performance |
| Timeline |
| Bank of America |
| Chenming Mold Industrial |
Bank of America and Chenming Mold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Chenming Mold
The main advantage of trading using opposite Bank of America and Chenming Mold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Chenming Mold 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 Chenming Mold will offset losses from the drop in Chenming Mold's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Chenming Mold vs. Clevo Co | Chenming Mold vs. Zinwell | Chenming Mold vs. Min Aik Technology | Chenming Mold vs. Promise Technology |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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