Correlation Between China Merchants and Shandong Homey
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By analyzing existing cross correlation between China Merchants Shekou and Shandong Homey Aquatic, you can compare the effects of market volatilities on China Merchants and Shandong Homey 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 Shandong Homey. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Shandong Homey.
Diversification Opportunities for China Merchants and Shandong Homey
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Shandong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Shandong Homey Aquatic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Homey Aquatic 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 Shandong Homey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Homey Aquatic has no effect on the direction of China Merchants i.e., China Merchants and Shandong Homey go up and down completely randomly.
Pair Corralation between China Merchants and Shandong Homey
Assuming the 90 days trading horizon China Merchants is expected to generate 6.3 times less return on investment than Shandong Homey. But when comparing it to its historical volatility, China Merchants Shekou is 1.89 times less risky than Shandong Homey. It trades about 0.05 of its potential returns per unit of risk. Shandong Homey Aquatic is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 221.00 in Shandong Homey Aquatic on September 5, 2024 and sell it today you would earn a total of 40.00 from holding Shandong Homey Aquatic or generate 18.1% 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. Shandong Homey Aquatic
Performance |
| Timeline |
| China Merchants Shekou |
| Shandong Homey Aquatic |
China Merchants and Shandong Homey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Shandong Homey
The main advantage of trading using opposite China Merchants and Shandong Homey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Shandong Homey 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 Shandong Homey will offset losses from the drop in Shandong Homey's long position.| China Merchants vs. Shanghai CEO Environmental | China Merchants vs. Dongfeng Automobile Co | China Merchants vs. Huaxia Fund Management | China Merchants vs. Beijing Kaiwen Education |
| Shandong Homey vs. Poly Real Estate | Shandong Homey vs. China Vanke Co | Shandong Homey vs. China Merchants Shekou | Shandong Homey 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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