Correlation Between China Merchants and CBOA Financial
Can any of the company-specific risk be diversified away by investing in both China Merchants and CBOA Financial 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 CBOA Financial 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 CBOA Financial, you can compare the effects of market volatilities on China Merchants and CBOA Financial 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 CBOA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and CBOA Financial.
Diversification Opportunities for China Merchants and CBOA Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and CBOA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and CBOA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOA Financial 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 CBOA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOA Financial has no effect on the direction of China Merchants i.e., China Merchants and CBOA Financial go up and down completely randomly.
Pair Corralation between China Merchants and CBOA Financial
If you would invest 365.00 in China Merchants Bank on August 26, 2024 and sell it today you would earn a total of 105.00 from holding China Merchants Bank or generate 28.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.61% |
| Values | Daily Returns |
China Merchants Bank vs. CBOA Financial
Performance |
| Timeline |
| China Merchants Bank |
| CBOA Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Merchants and CBOA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and CBOA Financial
The main advantage of trading using opposite China Merchants and CBOA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, CBOA Financial 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 CBOA Financial will offset losses from the drop in CBOA Financial's long position.| China Merchants vs. Standard Bank Group | China Merchants vs. PSB Holdings | China Merchants vs. United Overseas Bank | China Merchants vs. Turkiye Garanti Bankasi |
| CBOA Financial vs. Pioneer Bankcorp | CBOA Financial vs. Liberty Northwest Bancorp | CBOA Financial vs. First Community | CBOA Financial vs. Coeur dAlene Bancorp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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