Correlation Between Bank of China Limited and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Bank of China Limited and Naturhouse Health 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 Bank of China Limited and Naturhouse Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of China and Naturhouse Health SA, you can compare the effects of market volatilities on Bank of China Limited and Naturhouse Health 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 Bank of China Limited with a short position of Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China Limited and Naturhouse Health.
Diversification Opportunities for Bank of China Limited and Naturhouse Health
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Naturhouse is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health and Bank of China Limited 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 Bank of China are associated (or correlated) with Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Bank of China Limited i.e., Bank of China Limited and Naturhouse Health go up and down completely randomly.
Pair Corralation between Bank of China Limited and Naturhouse Health
Assuming the 90 days horizon Bank of China is expected to under-perform the Naturhouse Health. In addition to that, Bank of China Limited is 1.36 times more volatile than Naturhouse Health SA. It trades about -0.05 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.03 per unit of volatility. If you would invest 161.00 in Naturhouse Health SA on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Naturhouse Health SA or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of China vs. Naturhouse Health SA
Performance |
| Timeline |
| Bank of China Limited |
| Naturhouse Health |
Bank of China Limited and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China Limited and Naturhouse Health
The main advantage of trading using opposite Bank of China Limited and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China Limited position performs unexpectedly, Naturhouse Health 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Bank of China Limited vs. Superior Plus Corp | Bank of China Limited vs. NMI Holdings | Bank of China Limited vs. Origin Agritech | Bank of China Limited vs. SIVERS SEMICONDUCTORS AB |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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