Correlation Between BANK OF CHINA and FARM 51
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on BANK OF CHINA and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and FARM 51.
Diversification Opportunities for BANK OF CHINA and FARM 51
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BANK and FARM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and FARM 51 go up and down completely randomly.
Pair Corralation between BANK OF CHINA and FARM 51
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 1.68 times more return on investment than FARM 51. However, BANK OF CHINA is 1.68 times more volatile than FARM 51 GROUP. It trades about 0.17 of its potential returns per unit of risk. FARM 51 GROUP is currently generating about 0.07 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. FARM 51 GROUP
Performance |
| Timeline |
| BANK OF CHINA |
| FARM 51 GROUP |
BANK OF CHINA and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and FARM 51
The main advantage of trading using opposite BANK OF CHINA and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51'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 |
| FARM 51 vs. Spirent Communications plc | FARM 51 vs. GameStop Corp | FARM 51 vs. Telecom Argentina SA | FARM 51 vs. GAMING FAC SA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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