Correlation Between MetLife and China Mobile
Can any of the company-specific risk be diversified away by investing in both MetLife and China Mobile 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 Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and China Life Insurance, you can compare the effects of market volatilities on MetLife and China Mobile 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 Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and China Mobile.
Diversification Opportunities for MetLife and China Mobile
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetLife and China is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life 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 Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of MetLife i.e., MetLife and China Mobile go up and down completely randomly.
Pair Corralation between MetLife and China Mobile
Assuming the 90 days horizon MetLife is expected to generate 0.35 times more return on investment than China Mobile. However, MetLife is 2.82 times less risky than China Mobile. It trades about 0.45 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.04 per unit of risk. If you would invest 7,153 in MetLife on September 2, 2024 and sell it today you would earn a total of 1,164 from holding MetLife or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetLife vs. China Life Insurance
Performance |
| Timeline |
| MetLife |
| China Life Insurance |
MetLife and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and China Mobile
The main advantage of trading using opposite MetLife and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.The idea behind MetLife and China Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Mobile vs. Natural Health Trends | China Mobile vs. FEMALE HEALTH | China Mobile vs. Boyd Gaming | China Mobile vs. PENN NATL GAMING |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |