Correlation Between CHINA BANK and Whirlpool
Can any of the company-specific risk be diversified away by investing in both CHINA BANK and Whirlpool 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 BANK and Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on CHINA BANK and Whirlpool 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 BANK with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA BANK and Whirlpool.
Diversification Opportunities for CHINA BANK and Whirlpool
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Whirlpool is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and CHINA BANK 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of CHINA BANK i.e., CHINA BANK and Whirlpool go up and down completely randomly.
Pair Corralation between CHINA BANK and Whirlpool
Assuming the 90 days trading horizon CHINA BANK is expected to generate 14.51 times less return on investment than Whirlpool. In addition to that, CHINA BANK is 1.12 times more volatile than Whirlpool. It trades about 0.02 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.34 per unit of volatility. If you would invest 11,080 in Whirlpool on October 20, 2024 and sell it today you would earn a total of 1,385 from holding Whirlpool or generate 12.5% 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. Whirlpool
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Whirlpool |
CHINA BANK and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA BANK and Whirlpool
The main advantage of trading using opposite CHINA BANK and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA BANK position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| CHINA BANK vs. INDCOMMBK CHINA ADR20 | CHINA BANK vs. Industrial and Commercial | CHINA BANK vs. AGRICULTBK HADR25 YC | CHINA BANK vs. BANK OCHINA H |
| Whirlpool vs. Stag Industrial | Whirlpool vs. FIREWEED METALS P | Whirlpool vs. UNIQA INSURANCE GR | Whirlpool vs. Ultra Clean Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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