Correlation Between China Merchants and Bank of Qingdao
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By analyzing existing cross correlation between China Merchants Bank and Bank of Qingdao, you can compare the effects of market volatilities on China Merchants and Bank of Qingdao 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 Merchants with a short position of Bank of Qingdao. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank of Qingdao.
Diversification Opportunities for China Merchants and Bank of Qingdao
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Bank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bank of Qingdao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Qingdao and China Merchants 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 Merchants Bank are associated (or correlated) with Bank of Qingdao. 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 Qingdao has no effect on the direction of China Merchants i.e., China Merchants and Bank of Qingdao go up and down completely randomly.
Pair Corralation between China Merchants and Bank of Qingdao
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 1.07 times more return on investment than Bank of Qingdao. However, China Merchants is 1.07 times more volatile than Bank of Qingdao. It trades about 0.07 of its potential returns per unit of risk. Bank of Qingdao is currently generating about 0.07 per unit of risk. If you would invest 3,419 in China Merchants Bank on September 26, 2024 and sell it today you would earn a total of 503.00 from holding China Merchants Bank or generate 14.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.18% |
Values | Daily Returns |
China Merchants Bank vs. Bank of Qingdao
Performance |
Timeline |
China Merchants Bank |
Bank of Qingdao |
China Merchants and Bank of Qingdao Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Merchants and Bank of Qingdao
The main advantage of trading using opposite China Merchants and Bank of Qingdao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Bank of Qingdao 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 Qingdao will offset losses from the drop in Bank of Qingdao's long position.China Merchants vs. Kweichow Moutai Co | China Merchants vs. Contemporary Amperex Technology | China Merchants vs. G bits Network Technology | China Merchants vs. BYD Co Ltd |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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