Correlation Between CHINA BANK and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both CHINA BANK and Royal Caribbean 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 BANK and Royal Caribbean 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 Royal Caribbean Group, you can compare the effects of market volatilities on CHINA BANK and Royal Caribbean 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 BANK with a short position of Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA BANK and Royal Caribbean.
Diversification Opportunities for CHINA BANK and Royal Caribbean
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Royal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group and CHINA BANK 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of CHINA BANK i.e., CHINA BANK and Royal Caribbean go up and down completely randomly.
Pair Corralation between CHINA BANK and Royal Caribbean
Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to under-perform the Royal Caribbean. But the stock apears to be less risky and, when comparing its historical volatility, CHINA BANK ADR20 is 2.13 times less risky than Royal Caribbean. The stock trades about -0.05 of its potential returns per unit of risk. The Royal Caribbean Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 18,896 in Royal Caribbean Group on August 27, 2024 and sell it today you would earn a total of 4,264 from holding Royal Caribbean Group or generate 22.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. Royal Caribbean Group
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Royal Caribbean Group |
CHINA BANK and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA BANK and Royal Caribbean
The main advantage of trading using opposite CHINA BANK and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA BANK position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean's long position.| CHINA BANK vs. AGRICULTBK HADR25 YC | CHINA BANK vs. The Toronto Dominion Bank | CHINA BANK vs. Superior Plus Corp | CHINA BANK vs. NMI Holdings |
| Royal Caribbean vs. SIDETRADE EO 1 | Royal Caribbean vs. AUTO TRADER ADR | Royal Caribbean vs. Vastned Retail NV | Royal Caribbean vs. PRECISION DRILLING P |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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