Correlation Between Zoomlion Heavy and China Merchants
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By analyzing existing cross correlation between Zoomlion Heavy Industry and China Merchants Bank, you can compare the effects of market volatilities on Zoomlion Heavy 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 Zoomlion Heavy with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoomlion Heavy and China Merchants.
Diversification Opportunities for Zoomlion Heavy and China Merchants
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoomlion and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zoomlion Heavy Industry 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 Zoomlion Heavy 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 Zoomlion Heavy Industry 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 Zoomlion Heavy i.e., Zoomlion Heavy and China Merchants go up and down completely randomly.
Pair Corralation between Zoomlion Heavy and China Merchants
Assuming the 90 days trading horizon Zoomlion Heavy is expected to generate 3.94 times less return on investment than China Merchants. But when comparing it to its historical volatility, Zoomlion Heavy Industry is 1.15 times less risky than China Merchants. It trades about 0.07 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,660 in China Merchants Bank on September 28, 2024 and sell it today you would earn a total of 288.00 from holding China Merchants Bank or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoomlion Heavy Industry vs. China Merchants Bank
Performance |
| Timeline |
| Zoomlion Heavy Industry |
| China Merchants Bank |
Zoomlion Heavy and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoomlion Heavy and China Merchants
The main advantage of trading using opposite Zoomlion Heavy and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoomlion Heavy 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.| Zoomlion Heavy vs. Industrial and Commercial | Zoomlion Heavy vs. Agricultural Bank of | Zoomlion Heavy vs. China Construction Bank | Zoomlion Heavy vs. Bank of China |
| China Merchants vs. Kweichow Moutai Co | China Merchants vs. Contemporary Amperex Technology | China Merchants vs. G bits Network Technology | China Merchants vs. BYD Co Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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