Correlation Between Bank of China and Hangzhou Pinming

Can any of the company-specific risk be diversified away by investing in both Bank of China and Hangzhou Pinming 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 Hangzhou Pinming 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 Hangzhou Pinming Software, you can compare the effects of market volatilities on Bank of China and Hangzhou Pinming 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 Hangzhou Pinming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Hangzhou Pinming.

Diversification Opportunities for Bank of China and Hangzhou Pinming

0.08

Correlation Coefficient

Bank of China  Hangzhou Pinming

Significant diversification

The 3 months correlation between Bank and Hangzhou is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Hangzhou Pinming Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Pinming Software 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 Hangzhou Pinming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Pinming Software has no effect on the direction of Bank of China i.e., Bank of China and Hangzhou Pinming go up and down completely randomly.

Pair Corralation between Bank of China and Hangzhou Pinming

If you would invest  301.00  in Bank of China on September 26, 2024 and sell it today you would earn a total of  250.00  from holding Bank of China or generate 83.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bank of China  vs.  Hangzhou Pinming Software

Bank of China

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank of China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hangzhou Pinming Software

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hangzhou Pinming Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hangzhou Pinming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of China and Hangzhou Pinming

The main advantage of trading using opposite Bank of China and Hangzhou Pinming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Hangzhou Pinming 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 Hangzhou Pinming will offset losses from the drop in Hangzhou Pinming's long position.

The idea behind Bank of China and Hangzhou Pinming Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..