Correlation Between Bank of China Limited and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Bank of China Limited and Schibsted ASA 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 Schibsted ASA 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 Schibsted ASA A, you can compare the effects of market volatilities on Bank of China Limited and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China Limited and Schibsted ASA.
Diversification Opportunities for Bank of China Limited and Schibsted ASA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Schibsted is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Schibsted ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA A 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA A has no effect on the direction of Bank of China Limited i.e., Bank of China Limited and Schibsted ASA go up and down completely randomly.
Pair Corralation between Bank of China Limited and Schibsted ASA
Assuming the 90 days horizon Bank of China is expected to generate 5.62 times more return on investment than Schibsted ASA. However, Bank of China Limited is 5.62 times more volatile than Schibsted ASA A. It trades about 0.27 of its potential returns per unit of risk. Schibsted ASA A is currently generating about -0.44 per unit of risk. If you would invest 35.00 in Bank of China on October 20, 2024 and sell it today you would earn a total of 13.00 from holding Bank of China or generate 37.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of China vs. Schibsted ASA A
Performance |
Timeline |
Bank of China Limited |
Schibsted ASA A |
Bank of China Limited and Schibsted ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of China Limited and Schibsted ASA
The main advantage of trading using opposite Bank of China Limited and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China Limited position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.Bank of China Limited vs. JPMorgan Chase Co | Bank of China Limited vs. Bank of America | Bank of China Limited vs. Wells Fargo | Bank of China Limited vs. China Construction Bank |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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