Correlation Between COSCO SHIPPING and Bank of China
Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING and Bank of China 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 COSCO SHIPPING and Bank of China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSCO SHIPPING Holdings and Bank of China, you can compare the effects of market volatilities on COSCO SHIPPING and Bank of China 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 COSCO SHIPPING with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and Bank of China.
Diversification Opportunities for COSCO SHIPPING and Bank of China
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between COSCO and Bank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and COSCO SHIPPING 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 COSCO SHIPPING Holdings are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Bank of China go up and down completely randomly.
Pair Corralation between COSCO SHIPPING and Bank of China
Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to under-perform the Bank of China. In addition to that, COSCO SHIPPING is 1.05 times more volatile than Bank of China. It trades about -0.04 of its total potential returns per unit of risk. Bank of China is currently generating about 0.05 per unit of volatility. If you would invest 49.00 in Bank of China on October 12, 2024 and sell it today you would earn a total of 1.00 from holding Bank of China or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSCO SHIPPING Holdings vs. Bank of China
Performance |
| Timeline |
| COSCO SHIPPING Holdings |
| Bank of China |
COSCO SHIPPING and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSCO SHIPPING and Bank of China
The main advantage of trading using opposite COSCO SHIPPING and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING position performs unexpectedly, Bank of China 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 Bank of China will offset losses from the drop in Bank of China's long position.| COSCO SHIPPING vs. SITC International Holdings | COSCO SHIPPING vs. Orient Overseas Limited | COSCO SHIPPING vs. Pacific Basin Shipping | COSCO SHIPPING vs. SITC International Holdings |
| Bank of China vs. China Construction Bank | Bank of China vs. Industrial and Commercial | Bank of China vs. Bank of China | Bank of China vs. Agricultural Bank of |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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