Correlation Between Bank of China and IRONBARK ZINC
Can any of the company-specific risk be diversified away by investing in both Bank of China and IRONBARK ZINC 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 and IRONBARK ZINC 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 IRONBARK ZINC, you can compare the effects of market volatilities on Bank of China and IRONBARK ZINC 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 with a short position of IRONBARK ZINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and IRONBARK ZINC.
Diversification Opportunities for Bank of China and IRONBARK ZINC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and IRONBARK is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and IRONBARK ZINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRONBARK ZINC and Bank of 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 Bank of China are associated (or correlated) with IRONBARK ZINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRONBARK ZINC has no effect on the direction of Bank of China i.e., Bank of China and IRONBARK ZINC go up and down completely randomly.
Pair Corralation between Bank of China and IRONBARK ZINC
Assuming the 90 days horizon Bank of China is expected to generate 0.52 times more return on investment than IRONBARK ZINC. However, Bank of China is 1.91 times less risky than IRONBARK ZINC. It trades about 0.08 of its potential returns per unit of risk. IRONBARK ZINC is currently generating about 0.04 per unit of risk. If you would invest 14.00 in Bank of China on September 21, 2024 and sell it today you would earn a total of 32.00 from holding Bank of China or generate 228.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.64% |
| Values | Daily Returns |
Bank of China vs. IRONBARK ZINC
Performance |
| Timeline |
| Bank of China |
| IRONBARK ZINC |
Bank of China and IRONBARK ZINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of China and IRONBARK ZINC
The main advantage of trading using opposite Bank of China and IRONBARK ZINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, IRONBARK ZINC 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 IRONBARK ZINC will offset losses from the drop in IRONBARK ZINC's long position.| Bank of China vs. EEDUCATION ALBERT AB | Bank of China vs. Perseus Mining Limited | Bank of China vs. GRIFFIN MINING LTD | Bank of China vs. SERI INDUSTRIAL EO |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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