Correlation Between CHINA CONBANK and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK and REGAL ASIAN 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 CHINA CONBANK and REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA BANK ADR20 and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on CHINA CONBANK and REGAL ASIAN 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 CHINA CONBANK with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and REGAL ASIAN.
Diversification Opportunities for CHINA CONBANK and REGAL ASIAN
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CHINA and REGAL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and CHINA CONBANK 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 CHINA BANK ADR20 are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of CHINA CONBANK i.e., CHINA CONBANK and REGAL ASIAN go up and down completely randomly.
Pair Corralation between CHINA CONBANK and REGAL ASIAN
Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 0.78 times more return on investment than REGAL ASIAN. However, CHINA BANK ADR20 is 1.28 times less risky than REGAL ASIAN. It trades about -0.02 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.21 per unit of risk. If you would invest 1,390 in CHINA BANK ADR20 on September 1, 2024 and sell it today you would lose (10.00) from holding CHINA BANK ADR20 or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| CHINA BANK ADR20 |
| REGAL ASIAN INVESTMENTS |
CHINA CONBANK and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and REGAL ASIAN
The main advantage of trading using opposite CHINA CONBANK and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| CHINA CONBANK vs. TSOGO SUN GAMING | CHINA CONBANK vs. GAMESTOP | CHINA CONBANK vs. American Public Education | CHINA CONBANK vs. FRACTAL GAMING GROUP |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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