Correlation Between BANK OF CHINA and CHIBA BANK
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK, you can compare the effects of market volatilities on BANK OF CHINA and CHIBA BANK 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 CHIBA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and CHIBA BANK.
Diversification Opportunities for BANK OF CHINA and CHIBA BANK
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BANK and CHIBA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK 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 CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and CHIBA BANK go up and down completely randomly.
Pair Corralation between BANK OF CHINA and CHIBA BANK
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 3.41 times more return on investment than CHIBA BANK. However, BANK OF CHINA is 3.41 times more volatile than CHIBA BANK. It trades about 0.1 of its potential returns per unit of risk. CHIBA BANK is currently generating about 0.04 per unit of risk. If you would invest 10.00 in BANK OF CHINA on November 9, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. CHIBA BANK
Performance |
| Timeline |
| BANK OF CHINA |
| CHIBA BANK |
BANK OF CHINA and CHIBA BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and CHIBA BANK
The main advantage of trading using opposite BANK OF CHINA and CHIBA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, CHIBA BANK 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 CHIBA BANK will offset losses from the drop in CHIBA BANK's long position.| BANK OF CHINA vs. Diamyd Medical AB | BANK OF CHINA vs. Apollo Medical Holdings | BANK OF CHINA vs. FORTRESS BIOTECHPRFA 25 | BANK OF CHINA vs. CompuGroup Medical SE |
| CHIBA BANK vs. Firan Technology Group | CHIBA BANK vs. Siemens Healthineers AG | CHIBA BANK vs. Align Technology | CHIBA BANK vs. UPDATE SOFTWARE |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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