Correlation Between China Life and Bitcoin SV

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Can any of the company-specific risk be diversified away by investing in both China Life and Bitcoin SV 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 China Life and Bitcoin SV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Life Insurance and Bitcoin SV, you can compare the effects of market volatilities on China Life and Bitcoin SV 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 China Life with a short position of Bitcoin SV. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Bitcoin SV.

Diversification Opportunities for China Life and Bitcoin SV

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between China and Bitcoin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV and China Life 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 China Life Insurance are associated (or correlated) with Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of China Life i.e., China Life and Bitcoin SV go up and down completely randomly.

Pair Corralation between China Life and Bitcoin SV

Considering the 90-day investment horizon China Life Insurance is expected to generate 0.26 times more return on investment than Bitcoin SV. However, China Life Insurance is 3.85 times less risky than Bitcoin SV. It trades about -0.22 of its potential returns per unit of risk. Bitcoin SV is currently generating about -0.08 per unit of risk. If you would invest  747.00  in China Life Insurance on May 21, 2022 and sell it today you would lose (40.00)  from holding China Life Insurance or give up 5.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

China Life Insurance  vs.  Bitcoin SV

 Performance (%) 
       Timeline  
China Life Insurance 
China Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in China Life Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, China Life is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

China Price Channel

Bitcoin SV 
Bitcoin Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bitcoin SV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bitcoin Price Channel

China Life and Bitcoin SV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Life and Bitcoin SV

The main advantage of trading using opposite China Life and Bitcoin SV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Bitcoin SV 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 Bitcoin SV will offset losses from the drop in Bitcoin SV's long position.
The idea behind China Life Insurance and Bitcoin SV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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