Correlation Between China Merchants and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both China Merchants and Bank Hapoalim 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 Merchants and Bank Hapoalim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Bank and Bank Hapoalim ADR, you can compare the effects of market volatilities on China Merchants and Bank Hapoalim 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 Merchants with a short position of Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank Hapoalim.
Diversification Opportunities for China Merchants and Bank Hapoalim
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Bank is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR and China Merchants 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 Merchants Bank are associated (or correlated) with Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of China Merchants i.e., China Merchants and Bank Hapoalim go up and down completely randomly.
Pair Corralation between China Merchants and Bank Hapoalim
Assuming the 90 days horizon China Merchants Bank is expected to generate 1.33 times more return on investment than Bank Hapoalim. However, China Merchants is 1.33 times more volatile than Bank Hapoalim ADR. It trades about 0.2 of its potential returns per unit of risk. Bank Hapoalim ADR is currently generating about 0.0 per unit of risk. If you would invest 350.00 in China Merchants Bank on February 15, 2024 and sell it today you would earn a total of 115.00 from holding China Merchants Bank or generate 32.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Merchants Bank vs. Bank Hapoalim ADR
Performance |
Timeline |
China Merchants Bank |
Bank Hapoalim ADR |
China Merchants and Bank Hapoalim Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Merchants and Bank Hapoalim
The main advantage of trading using opposite China Merchants and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.China Merchants vs. Banco De Chile | China Merchants vs. CrossFirst Bankshares | China Merchants vs. Heritage Commerce Corp | China Merchants vs. Eastern Bankshares |
Bank Hapoalim vs. Banco De Chile | Bank Hapoalim vs. CrossFirst Bankshares | Bank Hapoalim vs. Heritage Commerce Corp | Bank Hapoalim vs. Eastern Bankshares |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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