Correlation Between Bank of Communications and Sinocat Environmental

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

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

Diversification Opportunities for Bank of Communications and Sinocat Environmental

0.0

Correlation Coefficient

Bank of Communications  Sinocat Environmental

Pay attention - limited upside

The 3 months correlation between Bank and Sinocat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Sinocat Environmental Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocat Environmental and Bank of Communications 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 Communications are associated (or correlated) with Sinocat Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocat Environmental has no effect on the direction of Bank of Communications i.e., Bank of Communications and Sinocat Environmental go up and down completely randomly.

Pair Corralation between Bank of Communications and Sinocat Environmental

Assuming the 90 days trading horizon Bank of Communications is expected to under-perform the Sinocat Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Communications is 2.85 times less risky than Sinocat Environmental. The stock trades about -0.04 of its potential returns per unit of risk. The Sinocat Environmental Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,878  in Sinocat Environmental Technology on December 26, 2024 and sell it today you would earn a total of  42.00  from holding Sinocat Environmental Technology or generate 2.24% return on investment over 90 days.

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

Bank of Communications  vs.  Sinocat Environmental Technolo

Bank of Communications

Risk-Adjusted Performance

Very Weak

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

Sinocat Environmental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocat Environmental Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sinocat Environmental 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 Communications and Sinocat Environmental

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

The idea behind Bank of Communications and Sinocat Environmental Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.