Correlation Between China BlueChemical and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Marsh McLennan 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 BlueChemical and Marsh McLennan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Marsh McLennan Companies, you can compare the effects of market volatilities on China BlueChemical and Marsh McLennan 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 BlueChemical with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Marsh McLennan.
Diversification Opportunities for China BlueChemical and Marsh McLennan
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Marsh is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies and China BlueChemical 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 BlueChemical are associated (or correlated) with Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of China BlueChemical i.e., China BlueChemical and Marsh McLennan go up and down completely randomly.
Pair Corralation between China BlueChemical and Marsh McLennan
Assuming the 90 days horizon China BlueChemical is expected to generate 3.49 times more return on investment than Marsh McLennan. However, China BlueChemical is 3.49 times more volatile than Marsh McLennan Companies. It trades about 0.07 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.15 per unit of risk. If you would invest 26.00 in China BlueChemical on October 29, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. Marsh McLennan Companies
Performance |
| Timeline |
| China BlueChemical |
| Marsh McLennan Companies |
China BlueChemical and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Marsh McLennan
The main advantage of trading using opposite China BlueChemical and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan's long position.| China BlueChemical vs. Sunny Optical Technology | China BlueChemical vs. CHINA TONTINE WINES | China BlueChemical vs. Agilent Technologies | China BlueChemical vs. GLG LIFE TECH |
| Marsh McLennan vs. Axway Software SA | Marsh McLennan vs. GBS Software AG | Marsh McLennan vs. China BlueChemical | Marsh McLennan vs. PTT Global Chemical |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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