Correlation Between Piraeus Bank and China Merchants
Can any of the company-specific risk be diversified away by investing in both Piraeus 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 Piraeus 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 Piraeus Bank SA and China Merchants Bank, you can compare the effects of market volatilities on Piraeus 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 Piraeus Bank with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and China Merchants.
Diversification Opportunities for Piraeus Bank and China Merchants
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Piraeus and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA 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 Piraeus 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 Piraeus Bank SA 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 Piraeus Bank i.e., Piraeus Bank and China Merchants go up and down completely randomly.
Pair Corralation between Piraeus Bank and China Merchants
Assuming the 90 days horizon Piraeus Bank is expected to generate 81.8 times less return on investment than China Merchants. But when comparing it to its historical volatility, Piraeus Bank SA is 1.32 times less risky than China Merchants. It trades about 0.0 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 393.00 in China Merchants Bank on February 4, 2024 and sell it today you would earn a total of 72.00 from holding China Merchants Bank or generate 18.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Piraeus Bank SA vs. China Merchants Bank
Performance |
Timeline |
Piraeus Bank SA |
China Merchants Bank |
Piraeus Bank and China Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Piraeus Bank and China Merchants
The main advantage of trading using opposite Piraeus Bank and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piraeus 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.Piraeus Bank vs. MSAD Insurance Group | Piraeus Bank vs. Daiwa House Industry | Piraeus Bank vs. Aquagold International | Piraeus Bank vs. Barloworld Ltd ADR |
China Merchants vs. MSAD Insurance Group | China Merchants vs. Daiwa House Industry | China Merchants vs. Aquagold International | China Merchants vs. Barloworld Ltd ADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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