Correlation Between China Merchants and National Bank
Can any of the company-specific risk be diversified away by investing in both China Merchants and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on China Merchants and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and National Bank.
Diversification Opportunities for China Merchants and National Bank
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of China Merchants i.e., China Merchants and National Bank go up and down completely randomly.
Pair Corralation between China Merchants and National Bank
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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. National Bank of
Performance |
| Timeline |
| China Merchants Bank |
| National Bank |
China Merchants and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and National Bank
The main advantage of trading using opposite China Merchants and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. Piraeus Bank SA | National Bank vs. Turkiye Garanti Bankasi | National Bank vs. Delhi Bank Corp | National Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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