Correlation Between AGRICULTBK HADR/25 and IND+COMMBK CHINA

Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR/25 and IND+COMMBK CHINA 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 AGRICULTBK HADR/25 and IND+COMMBK CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGRICULTBK HADR25 YC and INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on AGRICULTBK HADR/25 and IND+COMMBK CHINA 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 AGRICULTBK HADR/25 with a short position of IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR/25 and IND+COMMBK CHINA.

Diversification Opportunities for AGRICULTBK HADR/25 and IND+COMMBK CHINA

0.92

Correlation Coefficient

AGRICULTBK HADR/25  IND+COMMBK CHINA

Almost no diversification

The 3 months correlation between AGRICULTBK and IND+COMMBK is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 and AGRICULTBK HADR/25 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 AGRICULTBK HADR25 YC are associated (or correlated) with IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of AGRICULTBK HADR/25 i.e., AGRICULTBK HADR/25 and IND+COMMBK CHINA go up and down completely randomly.

Pair Corralation between AGRICULTBK HADR/25 and IND+COMMBK CHINA

Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 0.9 times more return on investment than IND+COMMBK CHINA. However, AGRICULTBK HADR25 YC is 1.11 times less risky than IND+COMMBK CHINA. It trades about 0.1 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.06 per unit of risk. If you would invest  985.00  in AGRICULTBK HADR25 YC on September 2, 2024 and sell it today you would earn a total of  135.00  from holding AGRICULTBK HADR25 YC or generate 13.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AGRICULTBK HADR25 YC  vs.  INDCOMMBK CHINA ADR20

AGRICULTBK HADR/25

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGRICULTBK HADR25 YC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGRICULTBK HADR/25 reported solid returns over the last few months and may actually be approaching a breakup point.

INDCOMMBK CHINA ADR20

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INDCOMMBK CHINA ADR20 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, IND+COMMBK CHINA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AGRICULTBK HADR/25 and IND+COMMBK CHINA

The main advantage of trading using opposite AGRICULTBK HADR/25 and IND+COMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR/25 position performs unexpectedly, IND+COMMBK CHINA 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 IND+COMMBK CHINA will offset losses from the drop in IND+COMMBK CHINA's long position.

The idea behind AGRICULTBK HADR25 YC and INDCOMMBK CHINA ADR20 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.

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.