Correlation Between CHINA HUARONG and Commerzbank
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Commerzbank 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 CHINA HUARONG and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and Commerzbank AG, you can compare the effects of market volatilities on CHINA HUARONG and Commerzbank 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 CHINA HUARONG with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Commerzbank.
Diversification Opportunities for CHINA HUARONG and Commerzbank
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and Commerzbank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Commerzbank go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Commerzbank
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Commerzbank. In addition to that, CHINA HUARONG is 7.13 times more volatile than Commerzbank AG. It trades about -0.03 of its total potential returns per unit of risk. Commerzbank AG is currently generating about -0.14 per unit of volatility. If you would invest 1,590 in Commerzbank AG on September 12, 2024 and sell it today you would lose (100.00) from holding Commerzbank AG or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Commerzbank AG
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Commerzbank AG |
CHINA HUARONG and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Commerzbank
The main advantage of trading using opposite CHINA HUARONG and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Commerzbank vs. Superior Plus Corp | Commerzbank vs. SIVERS SEMICONDUCTORS AB | Commerzbank vs. CHINA HUARONG ENERHD 50 | Commerzbank vs. NORDIC HALIBUT AS |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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