Correlation Between BANK OF CHINA and Nib Holdings
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and Nib Holdings 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 Nib Holdings 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 nib holdings limited, you can compare the effects of market volatilities on BANK OF CHINA and Nib Holdings 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 Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and Nib Holdings.
Diversification Opportunities for BANK OF CHINA and Nib Holdings
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and Nib is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited 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 Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and Nib Holdings go up and down completely randomly.
Pair Corralation between BANK OF CHINA and Nib Holdings
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 4.75 times more return on investment than Nib Holdings. However, BANK OF CHINA is 4.75 times more volatile than nib holdings limited. It trades about 0.25 of its potential returns per unit of risk. nib holdings limited is currently generating about 0.15 per unit of risk. If you would invest 35.00 in BANK OF CHINA on November 3, 2024 and sell it today you would earn a total of 15.00 from holding BANK OF CHINA or generate 42.86% 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. nib holdings limited
Performance |
| Timeline |
| BANK OF CHINA |
| nib holdings limited |
BANK OF CHINA and Nib Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and Nib Holdings
The main advantage of trading using opposite BANK OF CHINA and Nib Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, Nib Holdings 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 Nib Holdings will offset losses from the drop in Nib Holdings' long position.| BANK OF CHINA vs. SIVERS SEMICONDUCTORS AB | BANK OF CHINA vs. NorAm Drilling AS | BANK OF CHINA vs. Volkswagen AG | BANK OF CHINA vs. Darden Restaurants |
| Nib Holdings vs. Osisko Metals | Nib Holdings vs. Japan Medical Dynamic | Nib Holdings vs. Advanced Medical Solutions | Nib Holdings vs. Inspire Medical Systems |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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