Correlation Between Imeik Technology and Bank of China

Can any of the company-specific risk be diversified away by investing in both Imeik Technology and Bank of 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 Imeik Technology and Bank of China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Imeik Technology Development and Bank of China, you can compare the effects of market volatilities on Imeik Technology and Bank of 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 Imeik Technology with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imeik Technology and Bank of China.

Diversification Opportunities for Imeik Technology and Bank of China

-0.32

Correlation Coefficient

Imeik Technology  Bank of China

Very good diversification

The 3 months correlation between Imeik and Bank is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Imeik Technology Development and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and Imeik Technology 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 Imeik Technology Development are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of Imeik Technology i.e., Imeik Technology and Bank of China go up and down completely randomly.

Pair Corralation between Imeik Technology and Bank of China

Assuming the 90 days trading horizon Imeik Technology Development is expected to under-perform the Bank of China. In addition to that, Imeik Technology is 2.2 times more volatile than Bank of China. It trades about -0.03 of its total potential returns per unit of risk. Bank of China is currently generating about 0.08 per unit of volatility. If you would invest  331.00  in Bank of China on December 7, 2024 and sell it today you would earn a total of  213.00  from holding Bank of China or generate 64.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Imeik Technology Development  vs.  Bank of China

Imeik Technology Dev

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imeik Technology Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank of China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 6 (%) 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 April 2025.

Pair Trading with Imeik Technology and Bank of China

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

The idea behind Imeik Technology Development and Bank of China 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.