Correlation Between China Merchants and Bankinter
Can any of the company-specific risk be diversified away by investing in both China Merchants and Bankinter 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 Bankinter 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 Bankinter SA ADR, you can compare the effects of market volatilities on China Merchants and Bankinter 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 Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bankinter.
Diversification Opportunities for China Merchants and Bankinter
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Bankinter is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR 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 Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of China Merchants i.e., China Merchants and Bankinter go up and down completely randomly.
Pair Corralation between China Merchants and Bankinter
Assuming the 90 days horizon China Merchants Bank is expected to under-perform the Bankinter. In addition to that, China Merchants is 1.09 times more volatile than Bankinter SA ADR. It trades about -0.21 of its total potential returns per unit of risk. Bankinter SA ADR is currently generating about -0.05 per unit of volatility. If you would invest 800.00 in Bankinter SA ADR on August 26, 2024 and sell it today you would lose (35.00) from holding Bankinter SA ADR or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Bankinter SA ADR
Performance |
| Timeline |
| China Merchants Bank |
| Bankinter SA ADR |
China Merchants and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Bankinter
The main advantage of trading using opposite China Merchants and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.| China Merchants vs. China Everbright Bank | China Merchants vs. Postal Savings Bank | China Merchants vs. China Citic Bank | China Merchants vs. China Merchants Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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