Correlation Between China Merchants and Axis Bank
Can any of the company-specific risk be diversified away by investing in both China Merchants and Axis Bank 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 Axis Bank 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 Axis Bank Limited, you can compare the effects of market volatilities on China Merchants and Axis Bank 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 Axis Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Axis Bank.
Diversification Opportunities for China Merchants and Axis Bank
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Axis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Axis Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank Limited 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 Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank Limited has no effect on the direction of China Merchants i.e., China Merchants and Axis Bank go up and down completely randomly.
Pair Corralation between China Merchants and Axis Bank
Assuming the 90 days horizon China Merchants Bank is expected to generate 1.07 times more return on investment than Axis Bank. However, China Merchants is 1.07 times more volatile than Axis Bank Limited. It trades about 0.28 of its potential returns per unit of risk. Axis Bank Limited is currently generating about -0.25 per unit of risk. If you would invest 424.00 in China Merchants Bank on October 23, 2024 and sell it today you would earn a total of 86.00 from holding China Merchants Bank or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Axis Bank Limited
Performance |
| Timeline |
| China Merchants Bank |
| Axis Bank Limited |
China Merchants and Axis Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Axis Bank
The main advantage of trading using opposite China Merchants and Axis Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Axis Bank 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 Axis Bank will offset losses from the drop in Axis Bank's long position.| China Merchants vs. Entravision Communications | China Merchants vs. Align Technology | China Merchants vs. Mobilezone Holding AG | China Merchants vs. SMA Solar Technology |
| Axis Bank vs. Guangdong Investment Limited | Axis Bank vs. Virtus Investment Partners | Axis Bank vs. SOGECLAIR SA INH | Axis Bank vs. Westinghouse Air Brake |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |