Correlation Between PICKN PAY and Bank of China

Can any of the company-specific risk be diversified away by investing in both PICKN PAY and Bank of China 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 PICKN PAY and Bank of China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICKN PAY STORES and Bank of China, you can compare the effects of market volatilities on PICKN PAY and Bank of China 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 PICKN PAY with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and Bank of China.

Diversification Opportunities for PICKN PAY and Bank of China

0.18

Correlation Coefficient

PICKN PAY  Bank of China

Average diversification

The 3 months correlation between PICKN and Bank is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of PICKN PAY i.e., PICKN PAY and Bank of China go up and down completely randomly.

Pair Corralation between PICKN PAY and Bank of China

Assuming the 90 days trading horizon PICKN PAY is expected to generate 5.74 times less return on investment than Bank of China. In addition to that, PICKN PAY is 1.34 times more volatile than Bank of China. It trades about 0.01 of its total potential returns per unit of risk. Bank of China is currently generating about 0.04 per unit of volatility. If you would invest  49.00  in Bank of China on April 24, 2025 and sell it today you would earn a total of  2.00  from holding Bank of China or generate 4.08% return on investment over 90 days.

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

PICKN PAY STORES  vs.  Bank of China

PICKN PAY STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days PICKN PAY STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PICKN PAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of China

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of China are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bank of China is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PICKN PAY and Bank of China

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

The idea behind PICKN PAY STORES and Bank of China 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.