Correlation Between DAX Index and Bank of China Limited
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By analyzing existing cross correlation between DAX Index and Bank of China, you can compare the effects of market volatilities on DAX Index and Bank of China Limited 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 DAX Index with a short position of Bank of China Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Bank of China Limited.
Diversification Opportunities for DAX Index and Bank of China Limited
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DAX and Bank is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China Limited and DAX Index 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 DAX Index are associated (or correlated) with Bank of China Limited. 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 Limited has no effect on the direction of DAX Index i.e., DAX Index and Bank of China Limited go up and down completely randomly.
Pair Corralation between DAX Index and Bank of China Limited
Assuming the 90 days trading horizon DAX Index is expected to generate 7.2 times less return on investment than Bank of China Limited. But when comparing it to its historical volatility, DAX Index is 9.01 times less risky than Bank of China Limited. It trades about 0.08 of its potential returns per unit of risk. Bank of China is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Bank of China on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Bank of China or generate 168.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Bank of China
Performance |
| Timeline |
DAX Index and Bank of China Limited Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Bank of China
Pair trading matchups for Bank of China Limited
Pair Trading with DAX Index and Bank of China Limited
The main advantage of trading using opposite DAX Index and Bank of China Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Bank of China Limited 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 Limited will offset losses from the drop in Bank of China Limited's long position.| DAX Index vs. BE Semiconductor Industries | DAX Index vs. REGAL ASIAN INVESTMENTS | DAX Index vs. SEI INVESTMENTS | DAX Index vs. National Beverage Corp |
| Bank of China Limited vs. Ming Le Sports | Bank of China Limited vs. NTG Nordic Transport | Bank of China Limited vs. BII Railway Transportation | Bank of China Limited vs. TITANIUM TRANSPORTGROUP |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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