Correlation Between China Merchants and Chahua Modern
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By analyzing existing cross correlation between China Merchants Shekou and Chahua Modern Housewares, you can compare the effects of market volatilities on China Merchants and Chahua Modern 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 Chahua Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Chahua Modern.
Diversification Opportunities for China Merchants and Chahua Modern
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Chahua is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Chahua Modern Housewares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chahua Modern Housewares 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 Chahua Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chahua Modern Housewares has no effect on the direction of China Merchants i.e., China Merchants and Chahua Modern go up and down completely randomly.
Pair Corralation between China Merchants and Chahua Modern
Assuming the 90 days trading horizon China Merchants is expected to generate 2.09 times less return on investment than Chahua Modern. But when comparing it to its historical volatility, China Merchants Shekou is 1.8 times less risky than Chahua Modern. It trades about 0.13 of its potential returns per unit of risk. Chahua Modern Housewares is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,809 in Chahua Modern Housewares on August 31, 2024 and sell it today you would earn a total of 273.00 from holding Chahua Modern Housewares or generate 15.09% 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. Chahua Modern Housewares
Performance |
| Timeline |
| China Merchants Shekou |
| Chahua Modern Housewares |
China Merchants and Chahua Modern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Chahua Modern
The main advantage of trading using opposite China Merchants and Chahua Modern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Chahua Modern 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 Chahua Modern will offset losses from the drop in Chahua Modern's long position.| China Merchants vs. Hengdian Entertainment Co | China Merchants vs. Shenzhen Glory Medical | China Merchants vs. Guangzhou Jinyi Media | China Merchants vs. Guangdong Jinma Entertainment |
| Chahua Modern vs. China State Construction | Chahua Modern vs. China Merchants Shekou | Chahua Modern vs. Huafa Industrial Co | Chahua Modern vs. China International Capital |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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