Correlation Between China Merchants and Bank Of Georgia

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Can any of the company-specific risk be diversified away by investing in both China Merchants and Bank Of Georgia 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 Merchants and Bank Of Georgia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Bank and Bank Of Georgia, you can compare the effects of market volatilities on China Merchants and Bank Of Georgia 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 Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank Of Georgia.

Diversification Opportunities for China Merchants and Bank Of Georgia

ChinaBankDiversified AwayChinaBankDiversified Away100%
-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between China and Bank is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bank Of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of Georgia 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 Georgia. 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 Georgia has no effect on the direction of China Merchants i.e., China Merchants and Bank Of Georgia go up and down completely randomly.

Pair Corralation between China Merchants and Bank Of Georgia

If you would invest  5,400  in Bank Of Georgia on October 30, 2024 and sell it today you would earn a total of  0.00  from holding Bank Of Georgia or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy1.69%
ValuesDaily Returns

China Merchants Bank  vs.  Bank Of Georgia

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0204060
JavaScript chart by amCharts 3.21.15CIHHF BDGSF
       Timeline  
China Merchants Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Merchants Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, China Merchants is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.64.855.25.45.6
Bank Of Georgia 

Risk-Adjusted Performance

0 of 100

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

China Merchants and Bank Of Georgia Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.59-3.44-2.28-1.13-0.01831.042.143.234.335.42 0.0150.0200.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15CIHHF BDGSF
       Returns  

Pair Trading with China Merchants and Bank Of Georgia

The main advantage of trading using opposite China Merchants and Bank Of Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Bank Of Georgia 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 Georgia will offset losses from the drop in Bank Of Georgia's long position.
The idea behind China Merchants Bank and Bank Of Georgia 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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