Correlation Between Bank of China Limited and ZINZINO AB

Can any of the company-specific risk be diversified away by investing in both Bank of China Limited and ZINZINO AB 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 ZINZINO AB 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 ZINZINO AB B, you can compare the effects of market volatilities on Bank of China Limited and ZINZINO AB 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 ZINZINO AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China Limited and ZINZINO AB.

Diversification Opportunities for Bank of China Limited and ZINZINO AB

-0.41

Correlation Coefficient

Bank of China Limited  ZINZINO AB

Very good diversification

The 3 months correlation between Bank and ZINZINO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China and ZINZINO AB B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINZINO AB B 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 ZINZINO AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINZINO AB B has no effect on the direction of Bank of China Limited i.e., Bank of China Limited and ZINZINO AB go up and down completely randomly.

Pair Corralation between Bank of China Limited and ZINZINO AB

Assuming the 90 days horizon Bank of China Limited is expected to generate 3.13 times less return on investment than ZINZINO AB. But when comparing it to its historical volatility, Bank of China is 1.14 times less risky than ZINZINO AB. It trades about 0.06 of its potential returns per unit of risk. ZINZINO AB B is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  745.00  in ZINZINO AB B on October 9, 2024 and sell it today you would earn a total of  57.00  from holding ZINZINO AB B or generate 7.65% 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.  ZINZINO AB B

Bank of China Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bank of China Limited reported solid returns over the last few months and may actually be approaching a breakup point.

ZINZINO AB B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZINZINO AB B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bank of China Limited and ZINZINO AB

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

The idea behind Bank of China and ZINZINO AB B 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.