Correlation Between Bank of China Limited and Jonjee Hi

Can any of the company-specific risk be diversified away by investing in both Bank of China Limited and Jonjee Hi 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 Limited and Jonjee Hi 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 Jonjee Hi tech Industrial, you can compare the effects of market volatilities on Bank of China Limited and Jonjee Hi 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 Limited with a short position of Jonjee Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China Limited and Jonjee Hi.

Diversification Opportunities for Bank of China Limited and Jonjee Hi

-0.4

Correlation Coefficient

Bank of China Limited  Jonjee Hi

Very good diversification

The 3 months correlation between Bank and Jonjee is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and Jonjee Hi tech Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jonjee Hi tech and Bank of China Limited 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 Jonjee Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jonjee Hi tech has no effect on the direction of Bank of China Limited i.e., Bank of China Limited and Jonjee Hi go up and down completely randomly.

Pair Corralation between Bank of China Limited and Jonjee Hi

Assuming the 90 days trading horizon Bank of China is expected to generate 0.81 times more return on investment than Jonjee Hi. However, Bank of China is 1.24 times less risky than Jonjee Hi. It trades about 0.11 of its potential returns per unit of risk. Jonjee Hi tech Industrial is currently generating about -0.17 per unit of risk. If you would invest  501.00  in Bank of China on November 29, 2024 and sell it today you would earn a total of  40.00  from holding Bank of China or generate 7.98% return on investment over 90 days.

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

Bank of China  vs.  Jonjee Hi tech Industrial

Bank of China Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank of China Limited may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Jonjee Hi tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jonjee Hi tech Industrial 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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bank of China Limited and Jonjee Hi

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

The idea behind Bank of China and Jonjee Hi tech Industrial 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.