Correlation Between BANK OF CHINA and Stockland Corp

Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and Stockland Corp 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 Stockland Corp 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 Stockland Corp, you can compare the effects of market volatilities on BANK OF CHINA and Stockland Corp 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 Stockland Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and Stockland Corp.

Diversification Opportunities for BANK OF CHINA and Stockland Corp

0.42

Correlation Coefficient

BANK OF CHINA  Stockland Corp

Very weak diversification

The 3 months correlation between BANK and Stockland is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and Stockland Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland Corp 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 Stockland Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland Corp has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and Stockland Corp go up and down completely randomly.

Pair Corralation between BANK OF CHINA and Stockland Corp

Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 2.58 times more return on investment than Stockland Corp. However, BANK OF CHINA is 2.58 times more volatile than Stockland Corp. It trades about 0.18 of its potential returns per unit of risk. Stockland Corp is currently generating about 0.02 per unit of risk. If you would invest  35.00  in BANK OF CHINA on December 22, 2024 and sell it today you would earn a total of  19.00  from holding BANK OF CHINA or generate 54.29% return on investment over 90 days.

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

BANK OF CHINA  vs.  Stockland Corp

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BANK OF CHINA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Stockland Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stockland Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stockland Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BANK OF CHINA and Stockland Corp

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

The idea behind BANK OF CHINA and Stockland Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.