Correlation Between Rivian Automotive and China Merchants
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive 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 Rivian Automotive and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and China Merchants Bank, you can compare the effects of market volatilities on Rivian Automotive 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 Rivian Automotive with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and China Merchants.
Diversification Opportunities for Rivian Automotive and China Merchants
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rivian and China is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and Rivian Automotive 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 Rivian Automotive 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 Bank has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and China Merchants go up and down completely randomly.
Pair Corralation between Rivian Automotive and China Merchants
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the China Merchants. In addition to that, Rivian Automotive is 1.81 times more volatile than China Merchants Bank. It trades about -0.02 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.01 per unit of volatility. If you would invest 2,344 in China Merchants Bank on August 27, 2024 and sell it today you would lose (104.00) from holding China Merchants Bank or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. China Merchants Bank
Performance |
| Timeline |
| Rivian Automotive |
| China Merchants Bank |
Rivian Automotive and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and China Merchants
The main advantage of trading using opposite Rivian Automotive and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive 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' long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Lucid Group | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Mullen Automotive |
| China Merchants vs. China Everbright Bank | China Merchants vs. China Merchants Bank | China Merchants vs. Postal Savings Bank | China Merchants vs. China Citic Bank |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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