Correlation Between CHINA BANK and Amdocs

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

By analyzing existing cross correlation between CHINA BANK ADR20 and Amdocs Limited, you can compare the effects of market volatilities on CHINA BANK and Amdocs 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 BANK with a short position of Amdocs. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA BANK and Amdocs.

Diversification Opportunities for CHINA BANK and Amdocs

-0.35

Correlation Coefficient

CHINA BANK  Amdocs

Very good diversification

The 3 months correlation between CHINA and Amdocs is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited and CHINA BANK 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 BANK ADR20 are associated (or correlated) with Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of CHINA BANK i.e., CHINA BANK and Amdocs go up and down completely randomly.

Pair Corralation between CHINA BANK and Amdocs

Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 1.78 times more return on investment than Amdocs. However, CHINA BANK is 1.78 times more volatile than Amdocs Limited. It trades about 0.18 of its potential returns per unit of risk. Amdocs Limited is currently generating about 0.0 per unit of risk. If you would invest  1,430  in CHINA BANK ADR20 on April 29, 2025 and sell it today you would earn a total of  330.00  from holding CHINA BANK ADR20 or generate 23.08% return on investment over 90 days.

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

CHINA BANK ADR20  vs.  Amdocs Limited

CHINA BANK ADR20

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA BANK reported solid returns over the last few months and may actually be approaching a breakup point.

Amdocs Limited

Risk-Adjusted Performance

Weak

Over the last 90 days Amdocs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA BANK and Amdocs

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

The idea behind CHINA BANK ADR20 and Amdocs Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.