Correlation Between Canadian Imperial and Zhong Yang

Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Zhong Yang 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 Canadian Imperial and Zhong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Imperial Bank and Zhong Yang Financial, you can compare the effects of market volatilities on Canadian Imperial and Zhong Yang 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 Canadian Imperial with a short position of Zhong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Zhong Yang.

Diversification Opportunities for Canadian Imperial and Zhong Yang

0.82

Correlation Coefficient

Canadian Imperial  Zhong Yang

Very poor diversification

The 3 months correlation between Canadian and Zhong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Zhong Yang Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhong Yang Financial and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Zhong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhong Yang Financial has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Zhong Yang go up and down completely randomly.

Pair Corralation between Canadian Imperial and Zhong Yang

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to under-perform the Zhong Yang. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Imperial Bank is 2.42 times less risky than Zhong Yang. The stock trades about -0.13 of its potential returns per unit of risk. The Zhong Yang Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Zhong Yang Financial on December 19, 2024 and sell it today you would earn a total of  4.00  from holding Zhong Yang Financial or generate 3.13% return on investment over 90 days.

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

Canadian Imperial Bank  vs.  Zhong Yang Financial

Canadian Imperial Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Zhong Yang Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhong Yang Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Zhong Yang is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Canadian Imperial and Zhong Yang

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

The idea behind Canadian Imperial Bank and Zhong Yang Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.