Correlation Between Bank of America and CHINA FORTUNE
Can any of the company-specific risk be diversified away by investing in both Bank of America and CHINA FORTUNE 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 FORTUNE 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 FORTUNE HLDGHD001, you can compare the effects of market volatilities on Bank of America and CHINA FORTUNE 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 FORTUNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and CHINA FORTUNE.
Diversification Opportunities for Bank of America and CHINA FORTUNE
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and CHINA is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and CHINA FORTUNE HLDGHD001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA FORTUNE HLDGHD001 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 FORTUNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA FORTUNE HLDGHD001 has no effect on the direction of Bank of America i.e., Bank of America and CHINA FORTUNE go up and down completely randomly.
Pair Corralation between Bank of America and CHINA FORTUNE
Considering the 90-day investment horizon Bank of America is expected to generate 0.32 times more return on investment than CHINA FORTUNE. However, Bank of America is 3.1 times less risky than CHINA FORTUNE. It trades about 0.32 of its potential returns per unit of risk. CHINA FORTUNE HLDGHD001 is currently generating about -0.05 per unit of risk. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. CHINA FORTUNE HLDGHD001
Performance |
| Timeline |
| Bank of America |
| CHINA FORTUNE HLDGHD001 |
Bank of America and CHINA FORTUNE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and CHINA FORTUNE
The main advantage of trading using opposite Bank of America and CHINA FORTUNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, CHINA FORTUNE 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 FORTUNE will offset losses from the drop in CHINA FORTUNE's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Samsung Electronics Co | CHINA FORTUNE vs. Samsung Electronics Co |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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