Correlation Between China Merchants and China International
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By analyzing existing cross correlation between China Merchants Shekou and China International Capital, you can compare the effects of market volatilities on China Merchants and China International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and China International.
Diversification Opportunities for China Merchants and China International
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and China is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and China International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of China Merchants i.e., China Merchants and China International go up and down completely randomly.
Pair Corralation between China Merchants and China International
Assuming the 90 days trading horizon China Merchants Shekou is expected to generate 0.9 times more return on investment than China International. However, China Merchants Shekou is 1.11 times less risky than China International. It trades about -0.07 of its potential returns per unit of risk. China International Capital is currently generating about -0.08 per unit of risk. If you would invest 1,116 in China Merchants Shekou on August 28, 2024 and sell it today you would lose (50.00) from holding China Merchants Shekou or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Shekou vs. China International Capital
Performance |
| Timeline |
| China Merchants Shekou |
| China International |
China Merchants and China International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and China International
The main advantage of trading using opposite China Merchants and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, China International 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 International will offset losses from the drop in China International's long position.| China Merchants vs. China Nonferrous Metal | China Merchants vs. Jinhe Biotechnology Co | China Merchants vs. Zhejiang Yayi Metal | China Merchants vs. Gansu Yasheng Industrial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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