Correlation Between Turkiye Garanti and China Merchants

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

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

Diversification Opportunities for Turkiye Garanti and China Merchants

0.19
  Correlation Coefficient
Turkiye Garanti Bank
China Merchants Bank

Average diversification

The 3 months correlation between Turkiye and China is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bank 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 Turkiye Garanti 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 Turkiye Garanti Bank 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 Turkiye Garanti i.e., Turkiye Garanti and China Merchants go up and down completely randomly.

Pair Corralation between Turkiye Garanti and China Merchants

Assuming the 90 days horizon Turkiye Garanti Bank is expected to under-perform the China Merchants. But the otc stock apears to be less risky and, when comparing its historical volatility, Turkiye Garanti Bank is 1.05 times less risky than China Merchants. The otc stock trades about -0.02 of its potential returns per unit of risk. The China Merchants Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  463.00  in China Merchants Bank on September 4, 2021 and sell it today you would earn a total of  355.00  from holding China Merchants Bank or generate 76.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy45.16%
ValuesDaily Returns

Turkiye Garanti Bank  vs.  China Merchants Bank

 Performance (%) 
      Timeline 
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 January 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Turkiye Price Channel

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 and China Merchants Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Turkiye Garanti and China Merchants

The main advantage of trading using opposite Turkiye Garanti and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turkiye Garanti 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 Turkiye Garanti Bank 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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