Correlation Between Bank of China and Ningxia Xiaoming

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

Diversification Opportunities for Bank of China and Ningxia Xiaoming

BankNingxiaDiversified AwayBankNingxiaDiversified Away100%
0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank and Ningxia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Ningxia Xiaoming Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Xiaoming Agr 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 Ningxia Xiaoming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Xiaoming Agr has no effect on the direction of Bank of China i.e., Bank of China and Ningxia Xiaoming go up and down completely randomly.

Pair Corralation between Bank of China and Ningxia Xiaoming

Assuming the 90 days trading horizon Bank of China is expected to generate 4.38 times less return on investment than Ningxia Xiaoming. But when comparing it to its historical volatility, Bank of China is 3.33 times less risky than Ningxia Xiaoming. It trades about 0.14 of its potential returns per unit of risk. Ningxia Xiaoming Agriculture is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  880.00  in Ningxia Xiaoming Agriculture on September 16, 2024 and sell it today you would earn a total of  479.00  from holding Ningxia Xiaoming Agriculture or generate 54.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank of China  vs.  Ningxia Xiaoming Agriculture

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 01020304050
JavaScript chart by amCharts 3.21.15601988 300967
       Timeline  
Bank of China 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 10 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4.64.74.84.955.15.25.35.4
Ningxia Xiaoming Agr 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Xiaoming Agriculture are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Xiaoming sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec91011121314

Bank of China and Ningxia Xiaoming Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.56-3.42-2.27-1.130.01.172.373.584.785.99 0.050.100.15
JavaScript chart by amCharts 3.21.15601988 300967
       Returns  

Pair Trading with Bank of China and Ningxia Xiaoming

The main advantage of trading using opposite Bank of China and Ningxia Xiaoming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China position performs unexpectedly, Ningxia Xiaoming 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 Ningxia Xiaoming will offset losses from the drop in Ningxia Xiaoming's long position.
The idea behind Bank of China and Ningxia Xiaoming Agriculture 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

Other Complementary Tools

My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Transaction History
View history of all your transactions and understand their impact on performance
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance