Correlation Between BANK OF CHINA and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on BANK OF CHINA and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and X-FAB Silicon.
Diversification Opportunities for BANK OF CHINA and X-FAB Silicon
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BANK and X-FAB is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and X-FAB Silicon go up and down completely randomly.
Pair Corralation between BANK OF CHINA and X-FAB Silicon
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 0.66 times more return on investment than X-FAB Silicon. However, BANK OF CHINA is 1.52 times less risky than X-FAB Silicon. It trades about 0.17 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.01 per unit of risk. If you would invest 47.00 in BANK OF CHINA on October 10, 2024 and sell it today you would earn a total of 2.00 from holding BANK OF CHINA or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. X FAB Silicon Foundries
Performance |
| Timeline |
| BANK OF CHINA |
| X FAB Silicon |
BANK OF CHINA and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and X-FAB Silicon
The main advantage of trading using opposite BANK OF CHINA and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| BANK OF CHINA vs. Adtalem Global Education | BANK OF CHINA vs. CarsalesCom | BANK OF CHINA vs. G8 EDUCATION | BANK OF CHINA vs. QURATE RETAIL INC |
| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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