Correlation Between China Merchants and FirstSun Capital
Can any of the company-specific risk be diversified away by investing in both China Merchants and FirstSun Capital 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 FirstSun Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Bank and FirstSun Capital Bancorp, you can compare the effects of market volatilities on China Merchants and FirstSun Capital 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 FirstSun Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and FirstSun Capital.
Diversification Opportunities for China Merchants and FirstSun Capital
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and FirstSun is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and FirstSun Capital Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstSun Capital Bancorp 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 FirstSun Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstSun Capital Bancorp has no effect on the direction of China Merchants i.e., China Merchants and FirstSun Capital go up and down completely randomly.
Pair Corralation between China Merchants and FirstSun Capital
Assuming the 90 days horizon China Merchants Bank is expected to generate 0.92 times more return on investment than FirstSun Capital. However, China Merchants Bank is 1.09 times less risky than FirstSun Capital. It trades about 0.02 of its potential returns per unit of risk. FirstSun Capital Bancorp is currently generating about -0.06 per unit of risk. If you would invest 650.00 in China Merchants Bank on September 1, 2025 and sell it today you would earn a total of 9.00 from holding China Merchants Bank or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. FirstSun Capital Bancorp
Performance |
| Timeline |
| China Merchants Bank |
| FirstSun Capital Bancorp |
China Merchants and FirstSun Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and FirstSun Capital
The main advantage of trading using opposite China Merchants and FirstSun Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, FirstSun Capital 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 FirstSun Capital will offset losses from the drop in FirstSun Capital's long position.| China Merchants vs. InRetail Per Corp | China Merchants vs. Scandinavian Tobacco Group | China Merchants vs. Plaza Retail REIT | China Merchants vs. That Marketing Solution |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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