Correlation Between State Bank and China Merchants
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and China Merchants Bank, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and China Merchants.
Diversification Opportunities for State Bank and China Merchants
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between State and China is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and China Merchants go up and down completely randomly.
Pair Corralation between State Bank and China Merchants
Assuming the 90 days horizon State Bank of is expected to under-perform the China Merchants. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.45 times less risky than China Merchants. The stock trades about -0.11 of its potential returns per unit of risk. The China Merchants Bank is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 522.00 in China Merchants Bank on November 27, 2024 and sell it today you would earn a total of 21.00 from holding China Merchants Bank or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. China Merchants Bank
Performance |
| Timeline |
| State Bank |
| China Merchants Bank |
State Bank and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and China Merchants
The main advantage of trading using opposite State Bank and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. PURETECH HEALTH PLC | State Bank vs. Cardinal Health | State Bank vs. WESANA HEALTH HOLD | State Bank vs. Fukuyama Transporting Co |
| China Merchants vs. COREBRIDGE FINANCIAL INC | China Merchants vs. Citic Telecom International | China Merchants vs. Cembra Money Bank | China Merchants vs. BIOPHARMA CREDIT DL |
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.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |