Correlation Between BANK OCHINA and AGRICULTBK HADR/25
Can any of the company-specific risk be diversified away by investing in both BANK OCHINA and AGRICULTBK HADR/25 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 OCHINA and AGRICULTBK HADR/25 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK OCHINA H and AGRICULTBK HADR25 YC, you can compare the effects of market volatilities on BANK OCHINA and AGRICULTBK HADR/25 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 OCHINA with a short position of AGRICULTBK HADR/25. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OCHINA and AGRICULTBK HADR/25.
Diversification Opportunities for BANK OCHINA and AGRICULTBK HADR/25
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BANK and AGRICULTBK is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BANK OCHINA H and AGRICULTBK HADR25 YC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRICULTBK HADR/25 and BANK OCHINA 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 OCHINA H are associated (or correlated) with AGRICULTBK HADR/25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRICULTBK HADR/25 has no effect on the direction of BANK OCHINA i.e., BANK OCHINA and AGRICULTBK HADR/25 go up and down completely randomly.
Pair Corralation between BANK OCHINA and AGRICULTBK HADR/25
Assuming the 90 days trading horizon BANK OCHINA H is expected to under-perform the AGRICULTBK HADR/25. In addition to that, BANK OCHINA is 1.03 times more volatile than AGRICULTBK HADR25 YC. It trades about -0.02 of its total potential returns per unit of risk. AGRICULTBK HADR25 YC is currently generating about 0.03 per unit of volatility. If you would invest 1,130 in AGRICULTBK HADR25 YC on August 28, 2024 and sell it today you would earn a total of 10.00 from holding AGRICULTBK HADR25 YC or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OCHINA H vs. AGRICULTBK HADR25 YC
Performance |
| Timeline |
| BANK OCHINA H |
| AGRICULTBK HADR/25 |
BANK OCHINA and AGRICULTBK HADR/25 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OCHINA and AGRICULTBK HADR/25
The main advantage of trading using opposite BANK OCHINA and AGRICULTBK HADR/25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OCHINA position performs unexpectedly, AGRICULTBK HADR/25 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 AGRICULTBK HADR/25 will offset losses from the drop in AGRICULTBK HADR/25's long position.| BANK OCHINA vs. AGRICULTBK HADR25 YC | BANK OCHINA vs. The Toronto Dominion Bank | BANK OCHINA vs. Superior Plus Corp | BANK OCHINA vs. NMI Holdings |
| AGRICULTBK HADR/25 vs. The Toronto Dominion Bank | AGRICULTBK HADR/25 vs. Superior Plus Corp | AGRICULTBK HADR/25 vs. NMI Holdings | AGRICULTBK HADR/25 vs. Origin Agritech |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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