Correlation Between China Merchants and China Express
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By analyzing existing cross correlation between China Merchants Shekou and China Express Airlines, you can compare the effects of market volatilities on China Merchants and China Express 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 China Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and China Express.
Diversification Opportunities for China Merchants and China Express
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and China Express Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Express Airlines 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 China Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Express Airlines has no effect on the direction of China Merchants i.e., China Merchants and China Express go up and down completely randomly.
Pair Corralation between China Merchants and China Express
Assuming the 90 days trading horizon China Merchants is expected to generate 7.65 times less return on investment than China Express. In addition to that, China Merchants is 1.01 times more volatile than China Express Airlines. It trades about 0.02 of its total potential returns per unit of risk. China Express Airlines is currently generating about 0.15 per unit of volatility. If you would invest 727.00 in China Express Airlines on September 13, 2024 and sell it today you would earn a total of 116.00 from holding China Express Airlines or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. China Express Airlines
Performance |
| Timeline |
| China Merchants Shekou |
| China Express Airlines |
China Merchants and China Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and China Express
The main advantage of trading using opposite China Merchants and China Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, China Express 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 Express will offset losses from the drop in China Express' long position.| China Merchants vs. Shandong Publishing Media | China Merchants vs. Offshore Oil Engineering | China Merchants vs. Xinjiang Beixin RoadBridge | China Merchants vs. Beijing Kaiwen Education |
| China Express vs. China State Construction | China Express vs. Poly Real Estate | China Express vs. China Vanke Co | China Express vs. China Merchants Shekou |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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