Correlation Between China Merchants and China Enterprise
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By analyzing existing cross correlation between China Merchants Shekou and China Enterprise Co, you can compare the effects of market volatilities on China Merchants and China Enterprise 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 Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and China Enterprise.
Diversification Opportunities for China Merchants and China Enterprise
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and China Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Enterprise 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 Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Enterprise has no effect on the direction of China Merchants i.e., China Merchants and China Enterprise go up and down completely randomly.
Pair Corralation between China Merchants and China Enterprise
Assuming the 90 days trading horizon China Merchants Shekou is expected to under-perform the China Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, China Merchants Shekou is 1.73 times less risky than China Enterprise. The stock trades about -0.3 of its potential returns per unit of risk. The China Enterprise Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 296.00 in China Enterprise Co on September 28, 2024 and sell it today you would lose (11.00) from holding China Enterprise Co or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. China Enterprise Co
Performance |
| Timeline |
| China Merchants Shekou |
| China Enterprise |
China Merchants and China Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and China Enterprise
The main advantage of trading using opposite China Merchants and China Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, China Enterprise 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 Enterprise will offset losses from the drop in China Enterprise's long position.| China Merchants vs. PetroChina Co Ltd | China Merchants vs. China Mobile Limited | China Merchants vs. CNOOC Limited | China Merchants vs. Ping An Insurance |
| China Enterprise vs. INKON Life Technology | China Enterprise vs. Chahua Modern Housewares | China Enterprise vs. Anhui Deli Household | China Enterprise vs. China World Trade |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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