Correlation Between CHINA CONBANK and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK and Daimler Truck 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 CONBANK and Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA BANK ADR20 and Daimler Truck Holding, you can compare the effects of market volatilities on CHINA CONBANK and Daimler Truck 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 CONBANK with a short position of Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and Daimler Truck.
Diversification Opportunities for CHINA CONBANK and Daimler Truck
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Daimler is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding and CHINA CONBANK 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 BANK ADR20 are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of CHINA CONBANK i.e., CHINA CONBANK and Daimler Truck go up and down completely randomly.
Pair Corralation between CHINA CONBANK and Daimler Truck
Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 1.26 times more return on investment than Daimler Truck. However, CHINA CONBANK is 1.26 times more volatile than Daimler Truck Holding. It trades about 0.06 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.05 per unit of risk. If you would invest 929.00 in CHINA BANK ADR20 on September 23, 2024 and sell it today you would earn a total of 571.00 from holding CHINA BANK ADR20 or generate 61.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. Daimler Truck Holding
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Daimler Truck Holding |
CHINA CONBANK and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and Daimler Truck
The main advantage of trading using opposite CHINA CONBANK and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| CHINA CONBANK vs. INDCOMMBK CHINA ADR20 | CHINA CONBANK vs. Industrial and Commercial | CHINA CONBANK vs. AGRICULTBK HADR25 YC | CHINA CONBANK vs. BANK OCHINA H |
| Daimler Truck vs. Gold Road Resources | Daimler Truck vs. GOLD ROAD RES | Daimler Truck vs. Fevertree Drinks PLC | Daimler Truck vs. Yuexiu Transport Infrastructure |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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