Correlation Between China Merchants and Uwharrie Capital
Can any of the company-specific risk be diversified away by investing in both China Merchants and Uwharrie Capital 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 Uwharrie Capital 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 Uwharrie Capital Corp, you can compare the effects of market volatilities on China Merchants and Uwharrie Capital 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 Uwharrie Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Uwharrie Capital.
Diversification Opportunities for China Merchants and Uwharrie Capital
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Uwharrie is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Uwharrie Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uwharrie Capital Corp 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 Uwharrie Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uwharrie Capital Corp has no effect on the direction of China Merchants i.e., China Merchants and Uwharrie Capital go up and down completely randomly.
Pair Corralation between China Merchants and Uwharrie Capital
Assuming the 90 days horizon China Merchants Bank is expected to generate 4.39 times more return on investment than Uwharrie Capital. However, China Merchants is 4.39 times more volatile than Uwharrie Capital Corp. It trades about 0.05 of its potential returns per unit of risk. Uwharrie Capital Corp is currently generating about 0.07 per unit of risk. If you would invest 378.00 in China Merchants Bank on September 3, 2024 and sell it today you would earn a total of 92.00 from holding China Merchants Bank or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.39% |
| Values | Daily Returns |
China Merchants Bank vs. Uwharrie Capital Corp
Performance |
| Timeline |
| China Merchants Bank |
| Uwharrie Capital Corp |
China Merchants and Uwharrie Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Uwharrie Capital
The main advantage of trading using opposite China Merchants and Uwharrie Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Uwharrie Capital 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 Uwharrie Capital will offset losses from the drop in Uwharrie Capital'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 |
| Uwharrie Capital vs. ENB Financial Corp | Uwharrie Capital vs. First Reliance Bancshares | Uwharrie Capital vs. Oak Ridge Financial | Uwharrie Capital vs. Glen Burnie 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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