Correlation Between MetLife and China Pacific
Can any of the company-specific risk be diversified away by investing in both MetLife and China Pacific 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 MetLife and China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and China Pacific Insurance, you can compare the effects of market volatilities on MetLife and China Pacific 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 MetLife with a short position of China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and China Pacific.
Diversification Opportunities for MetLife and China Pacific
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MetLife and China is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance and MetLife 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 MetLife are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of MetLife i.e., MetLife and China Pacific go up and down completely randomly.
Pair Corralation between MetLife and China Pacific
Assuming the 90 days horizon MetLife is expected to generate 1.98 times less return on investment than China Pacific. But when comparing it to its historical volatility, MetLife is 3.61 times less risky than China Pacific. It trades about 0.11 of its potential returns per unit of risk. China Pacific Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 142.00 in China Pacific Insurance on September 2, 2024 and sell it today you would earn a total of 152.00 from holding China Pacific Insurance or generate 107.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. China Pacific Insurance
Performance |
| Timeline |
| MetLife |
| China Pacific Insurance |
MetLife and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and China Pacific
The main advantage of trading using opposite MetLife and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, China Pacific 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 Pacific will offset losses from the drop in China Pacific's long position.| MetLife vs. Digilife Technologies Limited | MetLife vs. Lion Biotechnologies | MetLife vs. GOLD ROAD RES | MetLife vs. ACCSYS TECHPLC EO |
| China Pacific vs. Silicon Motion Technology | China Pacific vs. PTT Global Chemical | China Pacific vs. GALENA MINING LTD | China Pacific vs. SEKISUI 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |