Correlation Between Rising Sun and China Merchants

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Can any of the company-specific risk be diversified away by investing in both Rising Sun 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 Rising Sun and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rising Sun Bancorp and China Merchants Bank, you can compare the effects of market volatilities on Rising Sun 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 Rising Sun with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Sun and China Merchants.

Diversification Opportunities for Rising Sun and China Merchants

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Rising and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rising Sun Bancorp 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 Rising Sun 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 Rising Sun Bancorp 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 Rising Sun i.e., Rising Sun and China Merchants go up and down completely randomly.

Pair Corralation between Rising Sun and China Merchants

If you would invest  0.00  in Rising Sun Bancorp on December 30, 2023 and sell it today you would earn a total of  0.00  from holding Rising Sun Bancorp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.4%
ValuesDaily Returns

Rising Sun Bancorp  vs.  China Merchants Bank

 Performance 
       Timeline  
Rising Sun Bancorp 

Risk-Adjusted Performance

0 of 100

 
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High
Very Weak
Over the last 90 days Rising Sun Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rising Sun is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
China Merchants Bank 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, China Merchants showed solid returns over the last few months and may actually be approaching a breakup point.

Rising Sun and China Merchants Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rising Sun and China Merchants

The main advantage of trading using opposite Rising Sun and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rising Sun 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.
The idea behind Rising Sun Bancorp and China Merchants 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 the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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