Correlation Between HMN Financial and China Merchants
Can any of the company-specific risk be diversified away by investing in both HMN Financial and China Merchants 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 HMN Financial and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and China Merchants Bank, you can compare the effects of market volatilities on HMN Financial and China Merchants 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 HMN Financial with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and China Merchants.
Diversification Opportunities for HMN Financial and China Merchants
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HMN and China is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and HMN Financial 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 HMN Financial are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of HMN Financial i.e., HMN Financial and China Merchants go up and down completely randomly.
Pair Corralation between HMN Financial and China Merchants
Given the investment horizon of 90 days HMN Financial is expected to generate 1.85 times less return on investment than China Merchants. But when comparing it to its historical volatility, HMN Financial is 2.79 times less risky than China Merchants. It trades about 0.03 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 523.00 in China Merchants Bank on August 24, 2024 and sell it today you would lose (53.00) from holding China Merchants Bank or give up 10.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.97% |
| Values | Daily Returns |
HMN Financial vs. China Merchants Bank
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| China Merchants Bank |
HMN Financial and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and China Merchants
The main advantage of trading using opposite HMN Financial and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| HMN Financial vs. Magyar Bancorp | HMN Financial vs. Home Federal Bancorp | HMN Financial vs. First Financial Northwest | HMN Financial vs. First Northwest Bancorp |
| China Merchants vs. Nedbank Group | China Merchants vs. Standard Bank Group | China Merchants vs. Bank Central Asia | China Merchants vs. PSB Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |