Correlation Between China Merchants and Mizuho Financial
Can any of the company-specific risk be diversified away by investing in both China Merchants and Mizuho 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 Merchants and Mizuho Financial 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 Mizuho Financial Group, you can compare the effects of market volatilities on China Merchants and Mizuho 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 Merchants with a short position of Mizuho Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Mizuho Financial.
Diversification Opportunities for China Merchants and Mizuho Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Mizuho is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial 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 Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of China Merchants i.e., China Merchants and Mizuho Financial go up and down completely randomly.
Pair Corralation between China Merchants and Mizuho Financial
Assuming the 90 days horizon China Merchants Bank is expected to generate 1.59 times more return on investment than Mizuho Financial. However, China Merchants is 1.59 times more volatile than Mizuho Financial Group. It trades about 0.16 of its potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.22 per unit of risk. If you would invest 334.00 in China Merchants Bank on September 12, 2024 and sell it today you would earn a total of 134.00 from holding China Merchants Bank or generate 40.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
China Merchants Bank vs. Mizuho Financial Group
Performance |
| Timeline |
| China Merchants Bank |
| Mizuho Financial |
China Merchants and Mizuho Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Mizuho Financial
The main advantage of trading using opposite China Merchants and Mizuho Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Mizuho 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 Mizuho Financial will offset losses from the drop in Mizuho Financial's long position.| China Merchants vs. INTERCONT HOTELS | China Merchants vs. Addus HomeCare | China Merchants vs. Dalata Hotel Group | China Merchants vs. Corporate Office Properties |
| Mizuho Financial vs. United Insurance Holdings | Mizuho Financial vs. Eagle Materials | Mizuho Financial vs. Direct Line Insurance | Mizuho Financial vs. HANOVER INSURANCE |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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