Correlation Between CHINA CH and BANKINTER ADR

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

By analyzing existing cross correlation between CHINA CH VENT and BANKINTER ADR 2007, you can compare the effects of market volatilities on CHINA CH and BANKINTER ADR 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 CH with a short position of BANKINTER ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CH and BANKINTER ADR.

Diversification Opportunities for CHINA CH and BANKINTER ADR

-0.54

Correlation Coefficient

CHINA CH  BANKINTER ADR

Excellent diversification

The 3 months correlation between CHINA and BANKINTER is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CHINA CH VENT and BANKINTER ADR 2007 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKINTER ADR 2007 and CHINA CH 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 CH VENT are associated (or correlated) with BANKINTER ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKINTER ADR 2007 has no effect on the direction of CHINA CH i.e., CHINA CH and BANKINTER ADR go up and down completely randomly.

Pair Corralation between CHINA CH and BANKINTER ADR

Assuming the 90 days horizon CHINA CH VENT is expected to under-perform the BANKINTER ADR. In addition to that, CHINA CH is 3.69 times more volatile than BANKINTER ADR 2007. It trades about -0.07 of its total potential returns per unit of risk. BANKINTER ADR 2007 is currently generating about 0.53 per unit of volatility. If you would invest  715.00  in BANKINTER ADR 2007 on October 27, 2024 and sell it today you would earn a total of  95.00  from holding BANKINTER ADR 2007 or generate 13.29% return on investment over 90 days.

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

CHINA CH VENT  vs.  BANKINTER ADR 2007

CHINA CH VENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA CH VENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BANKINTER ADR 2007

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BANKINTER ADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHINA CH and BANKINTER ADR

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

The idea behind CHINA CH VENT and BANKINTER ADR 2007 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.