Correlation Between Bank of China and Dongguan Aohai
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By analyzing existing cross correlation between Bank of China and Dongguan Aohai Technology, you can compare the effects of market volatilities on Bank of China and Dongguan Aohai 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 Dongguan Aohai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Dongguan Aohai.
Diversification Opportunities for Bank of China and Dongguan Aohai
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Dongguan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Dongguan Aohai Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongguan Aohai Technology 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 Dongguan Aohai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongguan Aohai Technology has no effect on the direction of Bank of China i.e., Bank of China and Dongguan Aohai go up and down completely randomly.
Pair Corralation between Bank of China and Dongguan Aohai
Assuming the 90 days trading horizon Bank of China is expected to generate 5.11 times less return on investment than Dongguan Aohai. But when comparing it to its historical volatility, Bank of China is 3.04 times less risky than Dongguan Aohai. It trades about 0.14 of its potential returns per unit of risk. Dongguan Aohai Technology is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,310 in Dongguan Aohai Technology on September 15, 2024 and sell it today you would earn a total of 1,600 from holding Dongguan Aohai Technology or generate 69.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of China vs. Dongguan Aohai Technology
Performance |
Timeline |
Bank of China |
Dongguan Aohai Technology |
Bank of China and Dongguan Aohai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of China and Dongguan Aohai
The main advantage of trading using opposite Bank of China and Dongguan Aohai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Dongguan Aohai 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 Dongguan Aohai will offset losses from the drop in Dongguan Aohai's long position.Bank of China vs. Chenzhou Jingui Silver | Bank of China vs. Zhejiang Yayi Metal | Bank of China vs. Gansu Yasheng Industrial | Bank of China vs. Hainan Mining Co |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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