Correlation Between Perma Fix and BANK OF CHINA
Can any of the company-specific risk be diversified away by investing in both Perma Fix 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 Perma Fix 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 Perma Fix Environmental Services and BANK OF CHINA, you can compare the effects of market volatilities on Perma Fix 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 Perma Fix with a short position of BANK OF CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Fix and BANK OF CHINA.
Diversification Opportunities for Perma Fix and BANK OF CHINA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Perma and BANK is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic 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 Perma Fix 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 Perma Fix Environmental Services 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 Perma Fix i.e., Perma Fix and BANK OF CHINA go up and down completely randomly.
Pair Corralation between Perma Fix and BANK OF CHINA
Assuming the 90 days trading horizon Perma Fix is expected to generate 4.62 times less return on investment than BANK OF CHINA. But when comparing it to its historical volatility, Perma Fix Environmental Services is 2.07 times less risky than BANK OF CHINA. It trades about 0.05 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 3, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perma Fix Environmental Servic vs. BANK OF CHINA
Performance |
| Timeline |
| Perma Fix Environmental |
| BANK OF CHINA |
Perma Fix and BANK OF CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perma Fix and BANK OF CHINA
The main advantage of trading using opposite Perma Fix and BANK OF CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma Fix 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.| Perma Fix vs. GOODYEAR T RUBBER | Perma Fix vs. NEWELL RUBBERMAID | Perma Fix vs. Materialise NV | Perma Fix vs. Goodyear Tire Rubber |
| BANK OF CHINA vs. BII Railway Transportation | BANK OF CHINA vs. SOEDER SPORTFISKE AB | BANK OF CHINA vs. TreeHouse Foods | BANK OF CHINA vs. TYSON FOODS A |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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