Correlation Between Accord Financial and China Merchants
Can any of the company-specific risk be diversified away by investing in both Accord Financial 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 Accord Financial and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accord Financial Corp and China Merchants Bank, you can compare the effects of market volatilities on Accord Financial 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 Accord Financial with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accord Financial and China Merchants.
Diversification Opportunities for Accord Financial and China Merchants
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Accord and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Accord Financial Corp 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 Accord Financial 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 Accord Financial Corp 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 Accord Financial i.e., Accord Financial and China Merchants go up and down completely randomly.
Pair Corralation between Accord Financial and China Merchants
Assuming the 90 days horizon Accord Financial Corp is expected to generate 0.11 times more return on investment than China Merchants. However, Accord Financial Corp is 8.95 times less risky than China Merchants. It trades about -0.03 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.02 per unit of risk. If you would invest 493.00 in Accord Financial Corp on January 20, 2024 and sell it today you would lose (8.00) from holding Accord Financial Corp or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Accord Financial Corp vs. China Merchants Bank
Performance |
| Timeline |
| Accord Financial Corp |
| China Merchants Bank |
Accord Financial and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accord Financial and China Merchants
The main advantage of trading using opposite Accord Financial and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accord Financial 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.| Accord Financial vs. Pfizer Inc | Accord Financial vs. Heartland Financial USA | Accord Financial vs. Conflux Network | Accord Financial vs. Citigroup Capital XIII |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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