Correlation Between REVO INSURANCE and BANK OF CHINA
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA and BANK OF CHINA, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of BANK OF CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and BANK OF CHINA.
Diversification Opportunities for REVO INSURANCE and BANK OF CHINA
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REVO and BANK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA 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 REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and BANK OF CHINA go up and down completely randomly.
Pair Corralation between REVO INSURANCE and BANK OF CHINA
Assuming the 90 days horizon REVO INSURANCE is expected to generate 5.06 times less return on investment than BANK OF CHINA. But when comparing it to its historical volatility, REVO INSURANCE SPA is 5.38 times less risky than BANK OF CHINA. It trades about 0.1 of its potential returns per unit of risk. BANK OF CHINA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10.00 in BANK OF CHINA on November 9, 2024 and sell it today you would earn a total of 40.00 from holding BANK OF CHINA or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. BANK OF CHINA
Performance |
| Timeline |
| REVO INSURANCE SPA |
| BANK OF CHINA |
REVO INSURANCE and BANK OF CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and BANK OF CHINA
The main advantage of trading using opposite REVO INSURANCE and BANK OF CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. China Communications Services | REVO INSURANCE vs. Universal Health Realty | REVO INSURANCE vs. Cairo Communication SpA | REVO INSURANCE vs. Phibro Animal Health |
| BANK OF CHINA vs. Diamyd Medical AB | BANK OF CHINA vs. Apollo Medical Holdings | BANK OF CHINA vs. FORTRESS BIOTECHPRFA 25 | BANK OF CHINA vs. CompuGroup Medical SE |
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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