Correlation Between China Merchants and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both China Merchants and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA ADR, you can compare the effects of market volatilities on China Merchants and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and UniCredit SpA.
Diversification Opportunities for China Merchants and UniCredit SpA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and UniCredit is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and UniCredit SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA ADR 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA ADR has no effect on the direction of China Merchants i.e., China Merchants and UniCredit SpA go up and down completely randomly.
Pair Corralation between China Merchants and UniCredit SpA
Assuming the 90 days horizon China Merchants is expected to generate 4.05 times less return on investment than UniCredit SpA. In addition to that, China Merchants is 1.46 times more volatile than UniCredit SpA ADR. It trades about 0.02 of its total potential returns per unit of risk. UniCredit SpA ADR is currently generating about 0.11 per unit of volatility. If you would invest 931.00 in UniCredit SpA ADR on August 31, 2024 and sell it today you would earn a total of 981.00 from holding UniCredit SpA ADR or generate 105.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
China Merchants Bank vs. UniCredit SpA ADR
Performance |
| Timeline |
| China Merchants Bank |
| UniCredit SpA ADR |
China Merchants and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and UniCredit SpA
The main advantage of trading using opposite China Merchants and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.| China Merchants vs. China Everbright Bank | China Merchants vs. China Merchants Bank | China Merchants vs. Postal Savings Bank | China Merchants vs. China Citic Bank |
| UniCredit SpA vs. Banco Do Brasil | UniCredit SpA vs. Societe Generale ADR | UniCredit SpA vs. BNP Paribas SA | UniCredit SpA vs. Credit Agricole SA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |