Correlation Between Hanison Construction and Bank of China

Can any of the company-specific risk be diversified away by investing in both Hanison Construction and Bank of China 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 Hanison Construction and Bank of China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanison Construction Holdings and Bank of China, you can compare the effects of market volatilities on Hanison Construction and Bank of China 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 Hanison Construction with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanison Construction and Bank of China.

Diversification Opportunities for Hanison Construction and Bank of China

0.0

Correlation Coefficient

Hanison Construction  Bank of China

Pay attention - limited upside

The 3 months correlation between Hanison and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hanison Construction Holdings and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and Hanison Construction 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 Hanison Construction Holdings are associated (or correlated) with Bank of China. 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 has no effect on the direction of Hanison Construction i.e., Hanison Construction and Bank of China go up and down completely randomly.

Pair Corralation between Hanison Construction and Bank of China

If you would invest  37.00  in Bank of China on December 29, 2024 and sell it today you would earn a total of  17.00  from holding Bank of China or generate 45.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hanison Construction Holdings  vs.  Bank of China

Hanison Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanison Construction Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Hanison Construction is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bank of China reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanison Construction and Bank of China

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

The idea behind Hanison Construction Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.