Correlation Between DevEx Resources and BANK OF CHINA -H-

Can any of the company-specific risk be diversified away by investing in both DevEx Resources and BANK OF CHINA -H- 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 DevEx Resources and BANK OF CHINA -H- into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DevEx Resources Limited and BANK OF CHINA, you can compare the effects of market volatilities on DevEx Resources and BANK OF CHINA -H- 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 DevEx Resources with a short position of BANK OF CHINA -H-. Check out your portfolio center. Please also check ongoing floating volatility patterns of DevEx Resources and BANK OF CHINA -H-.

Diversification Opportunities for DevEx Resources and BANK OF CHINA -H-

-0.59

Correlation Coefficient

DevEx Resources  BANK OF CHINA -H-

Excellent diversification

The 3 months correlation between DevEx and BANK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and BANK OF CHINA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF CHINA -H- and DevEx Resources 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 DevEx Resources Limited are associated (or correlated) with BANK OF CHINA -H-. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF CHINA -H- has no effect on the direction of DevEx Resources i.e., DevEx Resources and BANK OF CHINA -H- go up and down completely randomly.

Pair Corralation between DevEx Resources and BANK OF CHINA -H-

Assuming the 90 days horizon DevEx Resources is expected to generate 1.98 times less return on investment than BANK OF CHINA -H-. In addition to that, DevEx Resources is 2.35 times more volatile than BANK OF CHINA. It trades about 0.04 of its total potential returns per unit of risk. BANK OF CHINA is currently generating about 0.19 per unit of volatility. If you would invest  34.00  in BANK OF CHINA on December 19, 2024 and sell it today you would earn a total of  21.00  from holding BANK OF CHINA or generate 61.76% return on investment over 90 days.

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

DevEx Resources Limited  vs.  BANK OF CHINA

DevEx Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

BANK OF CHINA -H-

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BANK OF CHINA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BANK OF CHINA -H- unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DevEx Resources and BANK OF CHINA -H-

The main advantage of trading using opposite DevEx Resources and BANK OF CHINA -H- positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DevEx Resources position performs unexpectedly, BANK OF CHINA -H- 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 BANK OF CHINA -H- will offset losses from the drop in BANK OF CHINA -H-'s long position.

The idea behind DevEx Resources Limited and BANK OF CHINA 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 Global Correlations module to find global opportunities by holding instruments from different markets.