Correlation Between ChengDu Hi-Tech and China Merchants
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By analyzing existing cross correlation between ChengDu Hi Tech Development and China Merchants Shekou, you can compare the effects of market volatilities on ChengDu Hi-Tech 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 ChengDu Hi-Tech with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChengDu Hi-Tech and China Merchants.
Diversification Opportunities for ChengDu Hi-Tech and China Merchants
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ChengDu and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ChengDu Hi Tech Development and China Merchants Shekou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Shekou and ChengDu Hi-Tech 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 ChengDu Hi Tech Development 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 Shekou has no effect on the direction of ChengDu Hi-Tech i.e., ChengDu Hi-Tech and China Merchants go up and down completely randomly.
Pair Corralation between ChengDu Hi-Tech and China Merchants
Assuming the 90 days trading horizon ChengDu Hi Tech Development is expected to generate 1.42 times more return on investment than China Merchants. However, ChengDu Hi-Tech is 1.42 times more volatile than China Merchants Shekou. It trades about 0.21 of its potential returns per unit of risk. China Merchants Shekou is currently generating about 0.16 per unit of risk. If you would invest 3,523 in ChengDu Hi Tech Development on September 2, 2024 and sell it today you would earn a total of 2,379 from holding ChengDu Hi Tech Development or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChengDu Hi Tech Development vs. China Merchants Shekou
Performance |
| Timeline |
| ChengDu Hi Tech |
| China Merchants Shekou |
ChengDu Hi-Tech and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChengDu Hi-Tech and China Merchants
The main advantage of trading using opposite ChengDu Hi-Tech and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChengDu Hi-Tech 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.| ChengDu Hi-Tech vs. Hainan Airlines Co | ChengDu Hi-Tech vs. Shaanxi Broadcast TV | ChengDu Hi-Tech vs. Shanghai Ziyan Foods | ChengDu Hi-Tech vs. Eastroc Beverage Group |
| China Merchants vs. ChengDu Hi Tech Development | China Merchants vs. FSPG Hi Tech Co | China Merchants vs. Sunwave Communications Co | China Merchants vs. Zhejiang JIULI Hi tech |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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