Correlation Between Bank of China and Shenyang Blue

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bank of China and Shenyang Blue 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 Shenyang Blue 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 Shenyang Blue Silver, you can compare the effects of market volatilities on Bank of China and Shenyang Blue 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 Shenyang Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Shenyang Blue.

Diversification Opportunities for Bank of China and Shenyang Blue

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Shenyang is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Shenyang Blue Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Blue Silver 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 Shenyang Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Blue Silver has no effect on the direction of Bank of China i.e., Bank of China and Shenyang Blue go up and down completely randomly.

Pair Corralation between Bank of China and Shenyang Blue

Assuming the 90 days trading horizon Bank of China is expected to generate 5.33 times less return on investment than Shenyang Blue. But when comparing it to its historical volatility, Bank of China is 3.96 times less risky than Shenyang Blue. It trades about 0.08 of its potential returns per unit of risk. Shenyang Blue Silver is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Shenyang Blue Silver on October 2, 2024 and sell it today you would earn a total of  1,479  from holding Shenyang Blue Silver or generate 166.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bank of China  vs.  Shenyang Blue Silver

 Performance 
       Timeline  
Bank of China 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 11 (%) 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.
Shenyang Blue Silver 

Risk-Adjusted Performance

0 of 100

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

Bank of China and Shenyang Blue Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of China and Shenyang Blue

The main advantage of trading using opposite Bank of China and Shenyang Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Shenyang Blue 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 Shenyang Blue will offset losses from the drop in Shenyang Blue's long position.
The idea behind Bank of China and Shenyang Blue Silver 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk