Correlation Between Saratoga Investment and China Merchants
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment 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 Saratoga Investment and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and China Merchants Bank, you can compare the effects of market volatilities on Saratoga Investment 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 Saratoga Investment with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and China Merchants.
Diversification Opportunities for Saratoga Investment and China Merchants
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saratoga and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment 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 Saratoga Investment 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 Saratoga Investment 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 Saratoga Investment i.e., Saratoga Investment and China Merchants go up and down completely randomly.
Pair Corralation between Saratoga Investment and China Merchants
Considering the 90-day investment horizon Saratoga Investment Corp is expected to generate 0.64 times more return on investment than China Merchants. However, Saratoga Investment Corp is 1.56 times less risky than China Merchants. It trades about 0.02 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.01 per unit of risk. If you would invest 2,138 in Saratoga Investment Corp on January 24, 2024 and sell it today you would earn a total of 162.00 from holding Saratoga Investment Corp or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Saratoga Investment Corp vs. China Merchants Bank
Performance |
| Timeline |
| Saratoga Investment Corp |
| China Merchants Bank |
Saratoga Investment and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saratoga Investment and China Merchants
The main advantage of trading using opposite Saratoga Investment and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment 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.| Saratoga Investment vs. New Mountain Finance | Saratoga Investment vs. BlackRock TCP Capital | Saratoga Investment vs. Carlyle Secured Lending | Saratoga Investment vs. Sixth Street Specialty |
| China Merchants vs. First Horizon | China Merchants vs. First Horizon | China Merchants vs. KB Financial Group | China Merchants vs. Banco Santander Brasil |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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