Correlation Between China Merchants and Huayi Brothers
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By analyzing existing cross correlation between China Merchants Shekou and Huayi Brothers Media, you can compare the effects of market volatilities on China Merchants and Huayi Brothers 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 Huayi Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Huayi Brothers.
Diversification Opportunities for China Merchants and Huayi Brothers
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Huayi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Huayi Brothers Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huayi Brothers Media 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 Huayi Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huayi Brothers Media has no effect on the direction of China Merchants i.e., China Merchants and Huayi Brothers go up and down completely randomly.
Pair Corralation between China Merchants and Huayi Brothers
Assuming the 90 days trading horizon China Merchants is expected to generate 4.7 times less return on investment than Huayi Brothers. But when comparing it to its historical volatility, China Merchants Shekou is 2.2 times less risky than Huayi Brothers. It trades about 0.04 of its potential returns per unit of risk. Huayi Brothers Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Huayi Brothers Media on November 7, 2024 and sell it today you would earn a total of 74.00 from holding Huayi Brothers Media or generate 42.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. Huayi Brothers Media
Performance |
| Timeline |
| China Merchants Shekou |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huayi Brothers Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Merchants and Huayi Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Huayi Brothers
The main advantage of trading using opposite China Merchants and Huayi Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Huayi Brothers 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 Huayi Brothers will offset losses from the drop in Huayi Brothers' long position.The idea behind China Merchants Shekou and Huayi Brothers Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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