Correlation Between China Life and Banco Latinoamericano

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

Diversification Opportunities for China Life and Banco Latinoamericano

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between China and Banco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Banco Latinoamericano DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Latinoamericano 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 Banco Latinoamericano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Latinoamericano has no effect on the direction of China Life i.e., China Life and Banco Latinoamericano go up and down completely randomly.

Pair Corralation between China Life and Banco Latinoamericano

Considering the 90-day investment horizon China Life Insurance is expected to under-perform the Banco Latinoamericano. In addition to that, China Life is 1.24 times more volatile than Banco Latinoamericano DE. It trades about -0.01 of its total potential returns per unit of risk. Banco Latinoamericano DE is currently generating about 0.0 per unit of volatility. If you would invest  1,543  in Banco Latinoamericano DE on May 17, 2022 and sell it today you would lose (61.00)  from holding Banco Latinoamericano DE or give up 3.95% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

China Life Insurance  vs.  Banco Latinoamericano DE

 Performance (%) 
       Timeline  
China Life Insurance 
China Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in China Life Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, China Life may actually be approaching a critical reversion point that can send shares even higher in September 2022.

China Price Channel

Banco Latinoamericano 
Banco Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Latinoamericano DE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Banco Latinoamericano may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Banco Price Channel

China Life and Banco Latinoamericano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Life and Banco Latinoamericano

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

China Life Insurance

Pair trading matchups for China Life

The idea behind China Life Insurance and Banco Latinoamericano DE 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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