Correlation Between BANK OF CHINA and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on BANK OF CHINA and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and DAIRY FARM.
Diversification Opportunities for BANK OF CHINA and DAIRY FARM
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and DAIRY is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and DAIRY FARM go up and down completely randomly.
Pair Corralation between BANK OF CHINA and DAIRY FARM
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 2.91 times more return on investment than DAIRY FARM. However, BANK OF CHINA is 2.91 times more volatile than DAIRY FARM INTL. It trades about 0.17 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.04 per unit of risk. If you would invest 33.00 in BANK OF CHINA on November 8, 2024 and sell it today you would earn a total of 17.00 from holding BANK OF CHINA or generate 51.52% 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. DAIRY FARM INTL
Performance |
| Timeline |
| BANK OF CHINA |
| DAIRY FARM INTL |
BANK OF CHINA and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and DAIRY FARM
The main advantage of trading using opposite BANK OF CHINA and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM'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 |
| DAIRY FARM vs. ZURICH INSURANCE GROUP | DAIRY FARM vs. CHRYSALIS INVESTMENTS LTD | DAIRY FARM vs. PANIN INSURANCE | DAIRY FARM vs. Scottish Mortgage Investment |
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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |