Correlation Between QBE Insurance and CHINA MERCHANTS
Can any of the company-specific risk be diversified away by investing in both QBE Insurance 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 QBE Insurance and CHINA MERCHANTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QBE Insurance Group and CHINA MERCHANTS, you can compare the effects of market volatilities on QBE Insurance 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 QBE Insurance with a short position of CHINA MERCHANTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and CHINA MERCHANTS.
Diversification Opportunities for QBE Insurance and CHINA MERCHANTS
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and CHINA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and CHINA MERCHANTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA MERCHANTS and QBE Insurance 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 QBE Insurance Group 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 has no effect on the direction of QBE Insurance i.e., QBE Insurance and CHINA MERCHANTS go up and down completely randomly.
Pair Corralation between QBE Insurance and CHINA MERCHANTS
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.89 times more return on investment than CHINA MERCHANTS. However, QBE Insurance Group is 1.13 times less risky than CHINA MERCHANTS. It trades about 0.41 of its potential returns per unit of risk. CHINA MERCHANTS is currently generating about -0.04 per unit of risk. If you would invest 1,040 in QBE Insurance Group on August 30, 2024 and sell it today you would earn a total of 150.00 from holding QBE Insurance Group or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
QBE Insurance Group vs. CHINA MERCHANTS
Performance |
| Timeline |
| QBE Insurance Group |
| CHINA MERCHANTS |
QBE Insurance and CHINA MERCHANTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and CHINA MERCHANTS
The main advantage of trading using opposite QBE Insurance and CHINA MERCHANTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance 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's long position.| QBE Insurance vs. PICC Property and | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. Talanx AG |
| CHINA MERCHANTS vs. Zijin Mining Group | CHINA MERCHANTS vs. Harmony Gold Mining | CHINA MERCHANTS vs. Fast Retailing Co | CHINA MERCHANTS vs. RETAIL FOOD GROUP |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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