Correlation Between Postal Svgs and China Merchants

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Postal Svgs 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 Postal Svgs and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Svgs Bk and China Merchants Bank, you can compare the effects of market volatilities on Postal Svgs 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 Postal Svgs with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Svgs and China Merchants.

Diversification Opportunities for Postal Svgs and China Merchants

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Postal and China is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Postal Svgs Bk 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 Postal Svgs 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 Postal Svgs Bk 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 Postal Svgs i.e., Postal Svgs and China Merchants go up and down completely randomly.

Pair Corralation between Postal Svgs and China Merchants

Assuming the 90 days horizon Postal Svgs is expected to generate 2.39 times less return on investment than China Merchants. But when comparing it to its historical volatility, Postal Svgs Bk is 1.29 times less risky than China Merchants. It trades about 0.05 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,052  in China Merchants Bank on April 2, 2022 and sell it today you would earn a total of  268.00  from holding China Merchants Bank or generate 8.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Postal Svgs Bk  vs.  China Merchants Bank

 Performance (%) 
      Timeline 
Postal Svgs Bk 
Postal Performance
0 of 100
Over the last 90 days Postal Svgs Bk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Postal Svgs is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0525
Payout Ratio
0.75
Forward Annual Dividend Rate
0.77
Dividend Date
2022-08-24
Ex Dividend Date
2022-06-30

Postal 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 sluggish performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0374
Payout Ratio
0.68
Forward Annual Dividend Rate
1.14
Dividend Date
2022-08-25
Ex Dividend Date
2022-07-06

China Price Channel

Postal Svgs and China Merchants Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Postal Svgs and China Merchants

The main advantage of trading using opposite Postal Svgs and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Svgs 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.

Postal Svgs Bk

Pair trading matchups for Postal Svgs

The idea behind Postal Svgs Bk 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.

China Merchants Bank

Pair trading matchups for China Merchants

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go