Correlation Between BANK OCHINA and Fidelity National
Can any of the company-specific risk be diversified away by investing in both BANK OCHINA and Fidelity National 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 Fidelity National 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 Fidelity National Information, you can compare the effects of market volatilities on BANK OCHINA and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OCHINA and Fidelity National.
Diversification Opportunities for BANK OCHINA and Fidelity National
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BANK OCHINA H and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of BANK OCHINA i.e., BANK OCHINA and Fidelity National go up and down completely randomly.
Pair Corralation between BANK OCHINA and Fidelity National
Assuming the 90 days trading horizon BANK OCHINA H is expected to generate 2.17 times more return on investment than Fidelity National. However, BANK OCHINA is 2.17 times more volatile than Fidelity National Information. It trades about 0.1 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.12 per unit of risk. If you would invest 945.00 in BANK OCHINA H on September 4, 2024 and sell it today you would earn a total of 135.00 from holding BANK OCHINA H or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OCHINA H vs. Fidelity National Information
Performance |
| Timeline |
| BANK OCHINA H |
| Fidelity National |
BANK OCHINA and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OCHINA and Fidelity National
The main advantage of trading using opposite BANK OCHINA and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OCHINA position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| BANK OCHINA vs. Fidelity National Information | BANK OCHINA vs. Check Point Software | BANK OCHINA vs. MICRONIC MYDATA | BANK OCHINA vs. FORMPIPE SOFTWARE AB |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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