Correlation Between China Mobile and MetLife
Can any of the company-specific risk be diversified away by investing in both China Mobile and MetLife 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 Mobile and MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Life Insurance and MetLife, you can compare the effects of market volatilities on China Mobile and MetLife 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 Mobile with a short position of MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and MetLife.
Diversification Opportunities for China Mobile and MetLife
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and MetLife is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and China Mobile 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 Life Insurance are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of China Mobile i.e., China Mobile and MetLife go up and down completely randomly.
Pair Corralation between China Mobile and MetLife
Assuming the 90 days horizon China Mobile is expected to generate 4.2 times less return on investment than MetLife. In addition to that, China Mobile is 2.82 times more volatile than MetLife. It trades about 0.04 of its total potential returns per unit of risk. MetLife is currently generating about 0.45 per unit of volatility. If you would invest 7,153 in MetLife on September 2, 2024 and sell it today you would earn a total of 1,164 from holding MetLife or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. MetLife
Performance |
| Timeline |
| China Life Insurance |
| MetLife |
China Mobile and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and MetLife
The main advantage of trading using opposite China Mobile and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.| China Mobile vs. Natural Health Trends | China Mobile vs. FEMALE HEALTH | China Mobile vs. Boyd Gaming | China Mobile vs. PENN NATL GAMING |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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