Correlation Between China Merchants and Qinghai Salt
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By analyzing existing cross correlation between China Merchants Shekou and Qinghai Salt Lake, you can compare the effects of market volatilities on China Merchants and Qinghai Salt 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 Qinghai Salt. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Qinghai Salt.
Diversification Opportunities for China Merchants and Qinghai Salt
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Qinghai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Qinghai Salt Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinghai Salt Lake 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 Shekou are associated (or correlated) with Qinghai Salt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinghai Salt Lake has no effect on the direction of China Merchants i.e., China Merchants and Qinghai Salt go up and down completely randomly.
Pair Corralation between China Merchants and Qinghai Salt
Assuming the 90 days trading horizon China Merchants Shekou is expected to generate 1.46 times more return on investment than Qinghai Salt. However, China Merchants is 1.46 times more volatile than Qinghai Salt Lake. It trades about -0.01 of its potential returns per unit of risk. Qinghai Salt Lake is currently generating about -0.04 per unit of risk. If you would invest 1,367 in China Merchants Shekou on October 13, 2024 and sell it today you would lose (384.00) from holding China Merchants Shekou or give up 28.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. Qinghai Salt Lake
Performance |
| Timeline |
| China Merchants Shekou |
| Qinghai Salt Lake |
China Merchants and Qinghai Salt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Qinghai Salt
The main advantage of trading using opposite China Merchants and Qinghai Salt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Qinghai Salt 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 Qinghai Salt will offset losses from the drop in Qinghai Salt's long position.| China Merchants vs. Hubei Geoway Investment | China Merchants vs. Zoje Resources Investment | China Merchants vs. Chengdu Xingrong Investment | China Merchants vs. Cultural Investment Holdings |
| Qinghai Salt vs. Shanghai Rongtai Health | Qinghai Salt vs. Heren Health Co | Qinghai Salt vs. Shandong Hongchuang Aluminum | Qinghai Salt vs. Everjoy Health Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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