Correlation Between China Life and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both China Life and Manulife Financial 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 Life and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Life Insurance and Manulife Financial, you can compare the effects of market volatilities on China Life and Manulife Financial 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 Life with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Manulife Financial.
Diversification Opportunities for China Life and Manulife Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Manulife is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial and China Life 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 Life Insurance are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial has no effect on the direction of China Life i.e., China Life and Manulife Financial go up and down completely randomly.
Pair Corralation between China Life and Manulife Financial
Assuming the 90 days horizon China Life Insurance is expected to under-perform the Manulife Financial. In addition to that, China Life is 8.2 times more volatile than Manulife Financial. It trades about -0.11 of its total potential returns per unit of risk. Manulife Financial is currently generating about 0.22 per unit of volatility. If you would invest 1,457 in Manulife Financial on August 28, 2024 and sell it today you would earn a total of 28.00 from holding Manulife Financial or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. Manulife Financial
Performance |
| Timeline |
| China Life Insurance |
| Manulife Financial |
China Life and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Manulife Financial
The main advantage of trading using opposite China Life and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Manulife Financial 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 Manulife Financial will offset losses from the drop in Manulife Financial's long position.| China Life vs. CNO Financial Group | China Life vs. Genworth Financial | China Life vs. MetLife Preferred Stock | China Life vs. Prudential Public Limited |
| Manulife Financial vs. CNO Financial Group | Manulife Financial vs. Genworth Financial | Manulife Financial vs. MetLife Preferred Stock | Manulife Financial vs. Prudential Public Limited |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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