Correlation Between China Merchants and Turkiye Garanti

By analyzing existing cross correlation between China Merchants Bank and Turkiye Garanti Bank, you can compare the effects of market volatilities on China Merchants and Turkiye Garanti 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 Turkiye Garanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Turkiye Garanti.

Specify exactly 2 symbols:

Can any of the company-specific risk be diversified away by investing in both China Merchants and Turkiye Garanti 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 Turkiye Garanti into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for China Merchants and Turkiye Garanti

0.43
  Correlation Coefficient
China Merchants Bank
Turkiye Garanti Bank

Very weak diversification

The 3 months correlation between China and Turkiye is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Turkiye Garanti Bank in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Garanti Bank 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 Turkiye Garanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Garanti Bank has no effect on the direction of China Merchants i.e., China Merchants and Turkiye Garanti go up and down completely randomly.

Pair Corralation between China Merchants and Turkiye Garanti

Assuming the 90 days horizon China Merchants Bank is expected to generate 0.97 times more return on investment than Turkiye Garanti. However, China Merchants Bank is 1.03 times less risky than Turkiye Garanti. It trades about 0.08 of its potential returns per unit of risk. Turkiye Garanti Bank is currently generating about -0.03 per unit of risk. If you would invest  475.00  in China Merchants Bank on October 18, 2021 and sell it today you would earn a total of  309.00  from holding China Merchants Bank or generate 65.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy49.0%
ValuesDaily Returns

China Merchants Bank  vs.  Turkiye Garanti Bank

 Performance (%) 
      Timeline 
China Merchants Bank 
China Performance
0 of 100
Over the last 90 days China Merchants Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, China Merchants is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

China Price Channel

Turkiye Garanti Bank 
Turkiye Performance
0 of 100
Over the last 90 days Turkiye Garanti Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Turkiye Price Channel

China Merchants and Turkiye Garanti Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with China Merchants and Turkiye Garanti

The main advantage of trading using opposite China Merchants and Turkiye Garanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Turkiye Garanti 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 Turkiye Garanti will offset losses from the drop in Turkiye Garanti's long position.
The idea behind China Merchants Bank and Turkiye Garanti Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

Other Complementary Tools

Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go