Correlation Between Bank of America and Shih Kuen
Can any of the company-specific risk be diversified away by investing in both Bank of America and Shih Kuen 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 Shih Kuen 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 Shih Kuen Plastics, you can compare the effects of market volatilities on Bank of America and Shih Kuen 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 Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Shih Kuen.
Diversification Opportunities for Bank of America and Shih Kuen
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Shih is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics 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 Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Bank of America i.e., Bank of America and Shih Kuen go up and down completely randomly.
Pair Corralation between Bank of America and Shih Kuen
Considering the 90-day investment horizon Bank of America is expected to generate 3.51 times less return on investment than Shih Kuen. In addition to that, Bank of America is 1.45 times more volatile than Shih Kuen Plastics. It trades about 0.02 of its total potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.11 per unit of volatility. If you would invest 4,195 in Shih Kuen Plastics on November 18, 2024 and sell it today you would earn a total of 200.00 from holding Shih Kuen Plastics or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.08% |
| Values | Daily Returns |
Bank of America vs. Shih Kuen Plastics
Performance |
| Timeline |
| Bank of America |
| Shih Kuen Plastics |
Bank of America and Shih Kuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Shih Kuen
The main advantage of trading using opposite Bank of America and Shih Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Shih Kuen 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 Shih Kuen will offset losses from the drop in Shih Kuen'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 |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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