Correlation Between 1895 Of and China Merchants

Can any of the company-specific risk be diversified away by investing in both 1895 Of and China Merchants 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 1895 Of and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1895 of Wisconsin and China Merchants Bank, you can compare the effects of market volatilities on 1895 Of and China Merchants 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 1895 Of with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1895 Of and China Merchants.

Diversification Opportunities for 1895 Of and China Merchants

0.51

Correlation Coefficient

1895 Of  China Merchants

Very weak diversification

The 3 months correlation between 1895 and China is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding 1895 of Wisconsin and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and 1895 Of 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 1895 of Wisconsin are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of 1895 Of i.e., 1895 Of and China Merchants go up and down completely randomly.

Pair Corralation between 1895 Of and China Merchants

Given the investment horizon of 90 days 1895 of Wisconsin is expected to generate about the same return on investment as China Merchants Bank. But, 1895 of Wisconsin is 1.28 times less risky than China Merchants. It trades about 0.01 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.01 per unit of risk. If you would invest  2,630  in China Merchants Bank on September 25, 2024 and sell it today you would lose (137.00) from holding China Merchants Bank or give up 5.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.19%
Values	Daily Returns

1895 of Wisconsin  vs.  China Merchants Bank

1895 of Wisconsin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1895 of Wisconsin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, 1895 Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

China Merchants Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, China Merchants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 1895 Of and China Merchants

The main advantage of trading using opposite 1895 Of and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1895 Of position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.

The idea behind 1895 of Wisconsin and China Merchants Bank 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.