Correlation Between AGRICULTBK HADR25 and INDCOMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 and INDCOMMBK 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 AGRICULTBK HADR25 and INDCOMMBK CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on AGRICULTBK HADR25 and INDCOMMBK 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 AGRICULTBK HADR25 with a short position of INDCOMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and INDCOMMBK CHINA.
Diversification Opportunities for AGRICULTBK HADR25 and INDCOMMBK CHINA
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AGRICULTBK and INDCOMMBK is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC are associated (or correlated) with INDCOMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and INDCOMMBK CHINA go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR25 and INDCOMMBK CHINA
Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 0.85 times more return on investment than INDCOMMBK CHINA. However, AGRICULTBK HADR25 YC is 1.17 times less risky than INDCOMMBK CHINA. It trades about 0.16 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.14 per unit of risk. If you would invest 905.00 in AGRICULTBK HADR25 YC on November 2, 2024 and sell it today you would earn a total of 365.00 from holding AGRICULTBK HADR25 YC or generate 40.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| AGRICULTBK HADR25 |
| INDCOMMBK CHINA ADR20 |
AGRICULTBK HADR25 and INDCOMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR25 and INDCOMMBK CHINA
The main advantage of trading using opposite AGRICULTBK HADR25 and INDCOMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 position performs unexpectedly, INDCOMMBK 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 INDCOMMBK CHINA will offset losses from the drop in INDCOMMBK CHINA's long position.| AGRICULTBK HADR25 vs. HELIOS TECHS INC | AGRICULTBK HADR25 vs. PENN NATL GAMING | AGRICULTBK HADR25 vs. Minerals Technologies | AGRICULTBK HADR25 vs. SOFI TECHNOLOGIES |
| INDCOMMBK CHINA vs. Industrial and Commercial | INDCOMMBK CHINA vs. CHINA BANK ADR20 | INDCOMMBK CHINA vs. AGRICULTBK HADR25 YC | INDCOMMBK CHINA vs. BANK OCHINA H |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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