Correlation Between Japan Post and China Merchants
Can any of the company-specific risk be diversified away by investing in both Japan Post 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 Japan Post and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Holdings and China Merchants Bank, you can compare the effects of market volatilities on Japan Post 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 Japan Post with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and China Merchants.
Diversification Opportunities for Japan Post and China Merchants
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Japan and China is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings 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 Japan Post 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 Japan Post Holdings 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 Japan Post i.e., Japan Post and China Merchants go up and down completely randomly.
Pair Corralation between Japan Post and China Merchants
If you would invest 470.00 in China Merchants Bank on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Merchants Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Holdings vs. China Merchants Bank
Performance |
| Timeline |
| Japan Post Holdings |
| China Merchants Bank |
Japan Post and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and China Merchants
The main advantage of trading using opposite Japan Post and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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.| Japan Post vs. Piraeus Bank SA | Japan Post vs. Turkiye Garanti Bankasi | Japan Post vs. Delhi Bank Corp | Japan Post vs. Uwharrie Capital Corp |
| China Merchants vs. China Everbright Bank | China Merchants vs. Postal Savings Bank | China Merchants vs. China Citic Bank | China Merchants vs. China Merchants Bank |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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