Correlation Between China Merchants and Bank Utica

Can any of the company-specific risk be diversified away by investing in both China Merchants and Bank Utica 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 Utica 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 Utica Ny, you can compare the effects of market volatilities on China Merchants and Bank Utica 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 Utica. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank Utica.

Diversification Opportunities for China Merchants and Bank Utica

0.18

Correlation Coefficient

China Merchants  Bank Utica

Average diversification

The 3 months correlation between China and Bank is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bank Utica Ny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Utica Ny 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 Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Utica Ny has no effect on the direction of China Merchants i.e., China Merchants and Bank Utica go up and down completely randomly.

Pair Corralation between China Merchants and Bank Utica

Assuming the 90 days horizon China Merchants Bank is expected to generate 3.59 times more return on investment than Bank Utica. However, China Merchants is 3.59 times more volatile than Bank Utica Ny. It trades about 0.05 of its potential returns per unit of risk. Bank Utica Ny is currently generating about 0.17 per unit of risk. If you would invest  424.00  in China Merchants Bank on September 13, 2024 and sell it today you would earn a total of  46.00  from holding China Merchants Bank or generate 10.85% return on investment over 90 days.

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

China Merchants Bank  vs.  Bank Utica Ny

China Merchants Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, China Merchants reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Utica Ny

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Utica Ny are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Bank Utica disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Merchants and Bank Utica

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

The idea behind China Merchants Bank and Bank Utica Ny 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.