Correlation Between China Merchants and Japan Post
Can any of the company-specific risk be diversified away by investing in both China Merchants and Japan Post 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 Japan Post 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 Japan Post Holdings, you can compare the effects of market volatilities on China Merchants and Japan Post 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 Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Japan Post.
Diversification Opportunities for China Merchants and Japan Post
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Japan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Japan Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Holdings 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 Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Holdings has no effect on the direction of China Merchants i.e., China Merchants and Japan Post go up and down completely randomly.
Pair Corralation between China Merchants and Japan Post
If you would invest 470.00 in China Merchants Bank on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Merchants Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Japan Post Holdings
Performance |
| Timeline |
| China Merchants Bank |
| Japan Post Holdings |
China Merchants and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Japan Post
The main advantage of trading using opposite China Merchants and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Japan Post 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 Japan Post will offset losses from the drop in Japan Post'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 |
| Japan Post vs. Piraeus Bank SA | Japan Post vs. Turkiye Garanti Bankasi | Japan Post vs. Delhi Bank Corp | Japan Post vs. Uwharrie Capital Corp |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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