Correlation Between INDCOMMBK CHINA and AGRICULTBK HADR25
Can any of the company-specific risk be diversified away by investing in both INDCOMMBK CHINA and AGRICULTBK HADR25 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 INDCOMMBK CHINA and AGRICULTBK HADR25 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and AGRICULTBK HADR25 YC, you can compare the effects of market volatilities on INDCOMMBK CHINA and AGRICULTBK HADR25 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 INDCOMMBK CHINA with a short position of AGRICULTBK HADR25. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDCOMMBK CHINA and AGRICULTBK HADR25.
Diversification Opportunities for INDCOMMBK CHINA and AGRICULTBK HADR25
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INDCOMMBK and AGRICULTBK is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and AGRICULTBK HADR25 YC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRICULTBK HADR25 and INDCOMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with AGRICULTBK HADR25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRICULTBK HADR25 has no effect on the direction of INDCOMMBK CHINA i.e., INDCOMMBK CHINA and AGRICULTBK HADR25 go up and down completely randomly.
Pair Corralation between INDCOMMBK CHINA and AGRICULTBK HADR25
Assuming the 90 days trading horizon INDCOMMBK CHINA is expected to generate 1.02 times less return on investment than AGRICULTBK HADR25. In addition to that, INDCOMMBK CHINA is 1.33 times more volatile than AGRICULTBK HADR25 YC. It trades about 0.07 of its total potential returns per unit of risk. AGRICULTBK HADR25 YC is currently generating about 0.1 per unit of volatility. If you would invest 990.00 in AGRICULTBK HADR25 YC on September 23, 2024 and sell it today you would earn a total of 270.00 from holding AGRICULTBK HADR25 YC or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. AGRICULTBK HADR25 YC
Performance |
| Timeline |
| INDCOMMBK CHINA ADR20 |
| AGRICULTBK HADR25 |
INDCOMMBK CHINA and AGRICULTBK HADR25 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDCOMMBK CHINA and AGRICULTBK HADR25
The main advantage of trading using opposite INDCOMMBK CHINA and AGRICULTBK HADR25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDCOMMBK CHINA position performs unexpectedly, AGRICULTBK HADR25 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 AGRICULTBK HADR25 will offset losses from the drop in AGRICULTBK HADR25's long position.| INDCOMMBK CHINA vs. Industrial and Commercial | INDCOMMBK CHINA vs. CHINA BANK ADR20 | INDCOMMBK CHINA vs. AGRICULTBK HADR25 YC | INDCOMMBK CHINA vs. BANK OCHINA H |
| AGRICULTBK HADR25 vs. INDCOMMBK CHINA ADR20 | AGRICULTBK HADR25 vs. Industrial and Commercial | AGRICULTBK HADR25 vs. CHINA BANK ADR20 | AGRICULTBK HADR25 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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