Correlation Between China Merchants and Ligao Foods
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By analyzing existing cross correlation between China Merchants Shekou and Ligao Foods CoLtd, you can compare the effects of market volatilities on China Merchants and Ligao Foods 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 Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Ligao Foods.
Diversification Opportunities for China Merchants and Ligao Foods
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Ligao is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd 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 Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of China Merchants i.e., China Merchants and Ligao Foods go up and down completely randomly.
Pair Corralation between China Merchants and Ligao Foods
Assuming the 90 days trading horizon China Merchants Shekou is expected to generate 0.89 times more return on investment than Ligao Foods. However, China Merchants Shekou is 1.12 times less risky than Ligao Foods. It trades about 0.05 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about -0.01 per unit of risk. If you would invest 905.00 in China Merchants Shekou on September 4, 2024 and sell it today you would earn a total of 280.00 from holding China Merchants Shekou or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. Ligao Foods CoLtd
Performance |
| Timeline |
| China Merchants Shekou |
| Ligao Foods CoLtd |
China Merchants and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Ligao Foods
The main advantage of trading using opposite China Merchants and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.| China Merchants vs. Lander Sports Development | China Merchants vs. Chenzhou Jingui Silver | China Merchants vs. Sportsoul Co Ltd | China Merchants vs. Jiangxi Naipu Mining |
| Ligao Foods vs. Poly Real Estate | Ligao Foods vs. China Vanke Co | Ligao Foods vs. China Merchants Shekou | Ligao Foods vs. Huafa Industrial Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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