Correlation Between China Merchants and JSC Halyk

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

Diversification Opportunities for China Merchants and JSC Halyk

0.47

Correlation Coefficient

China Merchants  JSC Halyk

Very weak diversification

The 3 months correlation between China and JSC is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and JSC Halyk bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSC Halyk bank 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 JSC Halyk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSC Halyk bank has no effect on the direction of China Merchants i.e., China Merchants and JSC Halyk go up and down completely randomly.

Pair Corralation between China Merchants and JSC Halyk

Assuming the 90 days horizon China Merchants Bank is expected to generate 0.63 times more return on investment than JSC Halyk. However, China Merchants Bank is 1.6 times less risky than JSC Halyk. It trades about 0.11 of its potential returns per unit of risk. JSC Halyk bank is currently generating about 0.05 per unit of risk. If you would invest  486.00  in China Merchants Bank on December 28, 2024 and sell it today you would earn a total of  64.00  from holding China Merchants Bank or generate 13.17% return on investment over 90 days.

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

China Merchants Bank  vs.  JSC Halyk bank

China Merchants Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Merchants reported solid returns over the last few months and may actually be approaching a breakup point.

JSC Halyk bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JSC Halyk bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, JSC Halyk may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Merchants and JSC Halyk

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

The idea behind China Merchants Bank and JSC Halyk 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.