Correlation Between BOC Hong and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both BOC Hong and NYSE Composite 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 BOC Hong and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOC Hong Kong and NYSE Composite, you can compare the effects of market volatilities on BOC Hong and NYSE Composite 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 BOC Hong with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Hong and NYSE Composite.
Diversification Opportunities for BOC Hong and NYSE Composite
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BOC and NYSE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BOC Hong Kong and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and BOC Hong 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 BOC Hong Kong are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of BOC Hong i.e., BOC Hong and NYSE Composite go up and down completely randomly.
Pair Corralation between BOC Hong and NYSE Composite
Assuming the 90 days horizon BOC Hong Kong is expected to generate 2.04 times more return on investment than NYSE Composite. However, BOC Hong is 2.04 times more volatile than NYSE Composite. It trades about 0.26 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.31 per unit of risk. If you would invest 283.00 in BOC Hong Kong on February 14, 2024 and sell it today you would earn a total of 17.00 from holding BOC Hong Kong or generate 6.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BOC Hong Kong vs. NYSE Composite
Performance |
Timeline |
BOC Hong and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
BOC Hong Kong
Pair trading matchups for BOC Hong
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with BOC Hong and NYSE Composite
The main advantage of trading using opposite BOC Hong and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Hong position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.BOC Hong vs. First Ottawa Bancshares | BOC Hong vs. Coastal Carolina Bancshares | BOC Hong vs. First Bankers Trustshares | BOC Hong vs. North Dallas Bank |
NYSE Composite vs. Eldorado Gold Corp | NYSE Composite vs. Philip Morris International | NYSE Composite vs. Compania Cervecerias Unidas | NYSE Composite vs. Falcon Metals Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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