Correlation Between MEITUAN UNSPADR/2B and Commerzbank
Can any of the company-specific risk be diversified away by investing in both MEITUAN UNSPADR/2B and Commerzbank 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 MEITUAN UNSPADR/2B and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEITUAN UNSPADR2B and Commerzbank AG, you can compare the effects of market volatilities on MEITUAN UNSPADR/2B and Commerzbank 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 MEITUAN UNSPADR/2B with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEITUAN UNSPADR/2B and Commerzbank.
Diversification Opportunities for MEITUAN UNSPADR/2B and Commerzbank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MEITUAN and Commerzbank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MEITUAN UNSPADR2B and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR2B are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of MEITUAN UNSPADR/2B i.e., MEITUAN UNSPADR/2B and Commerzbank go up and down completely randomly.
Pair Corralation between MEITUAN UNSPADR/2B and Commerzbank
Assuming the 90 days trading horizon MEITUAN UNSPADR/2B is expected to generate 2.37 times less return on investment than Commerzbank. In addition to that, MEITUAN UNSPADR/2B is 1.65 times more volatile than Commerzbank AG. It trades about 0.02 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.07 per unit of volatility. If you would invest 746.00 in Commerzbank AG on August 26, 2024 and sell it today you would earn a total of 789.00 from holding Commerzbank AG or generate 105.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEITUAN UNSPADR2B vs. Commerzbank AG
Performance |
| Timeline |
| MEITUAN UNSPADR/2B |
| Commerzbank AG |
MEITUAN UNSPADR/2B and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEITUAN UNSPADR/2B and Commerzbank
The main advantage of trading using opposite MEITUAN UNSPADR/2B and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEITUAN UNSPADR/2B position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| MEITUAN UNSPADR/2B vs. Amazon Inc | MEITUAN UNSPADR/2B vs. Amazon Inc | MEITUAN UNSPADR/2B vs. Alibaba Group Holdings | MEITUAN UNSPADR/2B vs. Meituan |
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Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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