Correlation Between BANK OF CHINA and QINGCI GAMES
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and QINGCI GAMES 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 QINGCI GAMES 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 QINGCI GAMES INC, you can compare the effects of market volatilities on BANK OF CHINA and QINGCI GAMES 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 QINGCI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and QINGCI GAMES.
Diversification Opportunities for BANK OF CHINA and QINGCI GAMES
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and QINGCI is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and QINGCI GAMES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QINGCI GAMES INC 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 QINGCI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QINGCI GAMES INC has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and QINGCI GAMES go up and down completely randomly.
Pair Corralation between BANK OF CHINA and QINGCI GAMES
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 1.71 times more return on investment than QINGCI GAMES. However, BANK OF CHINA is 1.71 times more volatile than QINGCI GAMES INC. It trades about 0.15 of its potential returns per unit of risk. QINGCI GAMES INC is currently generating about 0.15 per unit of risk. If you would invest 33.00 in BANK OF CHINA on October 26, 2024 and sell it today you would earn a total of 15.00 from holding BANK OF CHINA or generate 45.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BANK OF CHINA vs. QINGCI GAMES INC
Performance |
Timeline |
BANK OF CHINA |
QINGCI GAMES INC |
BANK OF CHINA and QINGCI GAMES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BANK OF CHINA and QINGCI GAMES
The main advantage of trading using opposite BANK OF CHINA and QINGCI GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, QINGCI GAMES 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 QINGCI GAMES will offset losses from the drop in QINGCI GAMES's long position.BANK OF CHINA vs. GRIFFIN MINING LTD | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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