Correlation Between Lianhe Chemical and China Merchants
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By analyzing existing cross correlation between Lianhe Chemical Technology and China Merchants Bank, you can compare the effects of market volatilities on Lianhe Chemical and China Merchants 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 Lianhe Chemical with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and China Merchants.
Diversification Opportunities for Lianhe Chemical and China Merchants
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lianhe and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and Lianhe Chemical 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 Lianhe Chemical Technology are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and China Merchants go up and down completely randomly.
Pair Corralation between Lianhe Chemical and China Merchants
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to generate 1.45 times more return on investment than China Merchants. However, Lianhe Chemical is 1.45 times more volatile than China Merchants Bank. It trades about 0.15 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.04 per unit of risk. If you would invest 545.00 in Lianhe Chemical Technology on September 13, 2024 and sell it today you would earn a total of 71.00 from holding Lianhe Chemical Technology or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. China Merchants Bank
Performance |
| Timeline |
| Lianhe Chemical Tech |
| China Merchants Bank |
Lianhe Chemical and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and China Merchants
The main advantage of trading using opposite Lianhe Chemical and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, China Merchants 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 Merchants will offset losses from the drop in China Merchants' long position.| Lianhe Chemical vs. Zijin Mining Group | Lianhe Chemical vs. Wanhua Chemical Group | Lianhe Chemical vs. Baoshan Iron Steel | Lianhe Chemical vs. Shandong Gold Mining |
| China Merchants vs. Shanghai Yaoji Playing | China Merchants vs. Lander Sports Development | China Merchants vs. Lianhe Chemical Technology | China Merchants vs. Shenzhen Noposion Agrochemicals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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