Correlation Between China Merchants and United Community
Can any of the company-specific risk be diversified away by investing in both China Merchants and United Community 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 United Community 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 United Community Banks, you can compare the effects of market volatilities on China Merchants and United Community 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 United Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and United Community.
Diversification Opportunities for China Merchants and United Community
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and United is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and United Community Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks 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 United Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks has no effect on the direction of China Merchants i.e., China Merchants and United Community go up and down completely randomly.
Pair Corralation between China Merchants and United Community
If you would invest 2,434 in United Community Banks on August 28, 2024 and sell it today you would earn a total of 0.00 from holding United Community Banks or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
China Merchants Bank vs. United Community Banks
Performance |
| Timeline |
| China Merchants Bank |
| United Community Banks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Merchants and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and United Community
The main advantage of trading using opposite China Merchants and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, United Community 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 United Community will offset losses from the drop in United Community'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 |
| United Community vs. Pinnacle Financial Partners | United Community vs. Wintrust Financial Corp | United Community vs. Heartland Financial USA | United Community vs. OceanFirst Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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