Correlation Between Bank of America and China Resources
Can any of the company-specific risk be diversified away by investing in both Bank of America and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Bank of America and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and China Resources.
Diversification Opportunities for Bank of America and China Resources
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Bank of America i.e., Bank of America and China Resources go up and down completely randomly.
Pair Corralation between Bank of America and China Resources
Considering the 90-day investment horizon Bank of America is expected to generate 0.56 times more return on investment than China Resources. However, Bank of America is 1.79 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.04 per unit of risk. If you would invest 3,272 in Bank of America on August 28, 2024 and sell it today you would earn a total of 1,478 from holding Bank of America or generate 45.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. China Resources Beer
Performance |
| Timeline |
| Bank of America |
| China Resources Beer |
Bank of America and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and China Resources
The main advantage of trading using opposite Bank of America and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| China Resources vs. Budweiser Brewing | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. Anheuser Busch Inbev | China Resources vs. Molson Coors Brewing |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |