Correlation Between Bank of China and Guangdong Advertising
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By analyzing existing cross correlation between Bank of China and Guangdong Advertising Co, you can compare the effects of market volatilities on Bank of China and Guangdong Advertising 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 Guangdong Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Guangdong Advertising.
Diversification Opportunities for Bank of China and Guangdong Advertising
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Guangdong is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Guangdong Advertising Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Advertising 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 Guangdong Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Advertising has no effect on the direction of Bank of China i.e., Bank of China and Guangdong Advertising go up and down completely randomly.
Pair Corralation between Bank of China and Guangdong Advertising
Assuming the 90 days trading horizon Bank of China is expected to generate 4.01 times less return on investment than Guangdong Advertising. But when comparing it to its historical volatility, Bank of China is 7.38 times less risky than Guangdong Advertising. It trades about 0.37 of its potential returns per unit of risk. Guangdong Advertising Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 772.00 in Guangdong Advertising Co on September 23, 2024 and sell it today you would earn a total of 207.00 from holding Guangdong Advertising Co or generate 26.81% 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. Guangdong Advertising Co
Performance |
Timeline |
Bank of China |
Guangdong Advertising |
Bank of China and Guangdong Advertising Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of China and Guangdong Advertising
The main advantage of trading using opposite Bank of China and Guangdong Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Guangdong Advertising 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 Guangdong Advertising will offset losses from the drop in Guangdong Advertising's long position.Bank of China vs. SUNSEA Telecommunications Co | Bank of China vs. Juewei Food Co | Bank of China vs. Jiajia Food Group | Bank of China vs. Allwin Telecommunication 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 Stocks Directory module to find actively traded stocks across global markets.
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