Correlation Between China Merchants and New Hope
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By analyzing existing cross correlation between China Merchants Shekou and New Hope Dairy, you can compare the effects of market volatilities on China Merchants and New Hope 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 New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and New Hope.
Diversification Opportunities for China Merchants and New Hope
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and New is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy 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 New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of China Merchants i.e., China Merchants and New Hope go up and down completely randomly.
Pair Corralation between China Merchants and New Hope
Assuming the 90 days trading horizon China Merchants Shekou is expected to under-perform the New Hope. But the stock apears to be less risky and, when comparing its historical volatility, China Merchants Shekou is 1.41 times less risky than New Hope. The stock trades about -0.09 of its potential returns per unit of risk. The New Hope Dairy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,325 in New Hope Dairy on September 12, 2024 and sell it today you would earn a total of 164.00 from holding New Hope Dairy or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Merchants Shekou vs. New Hope Dairy
Performance |
| Timeline |
| China Merchants Shekou |
| New Hope Dairy |
China Merchants and New Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and New Hope
The main advantage of trading using opposite China Merchants and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.| China Merchants vs. Chongqing Brewery Co | China Merchants vs. Duzhe Publishing Media | China Merchants vs. Chinese Universe Publishing | China Merchants vs. Zhejiang Publishing Media |
| New Hope vs. China Petroleum Chemical | New Hope vs. PetroChina Co Ltd | New Hope vs. China State Construction | New Hope vs. China Railway 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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