Correlation Between Guangdong Jingyi and China Merchants
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By analyzing existing cross correlation between Guangdong Jingyi Metal and China Merchants Bank, you can compare the effects of market volatilities on Guangdong Jingyi 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 Guangdong Jingyi with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and China Merchants.
Diversification Opportunities for Guangdong Jingyi and China Merchants
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and China is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal 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 Guangdong Jingyi 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 Guangdong Jingyi Metal 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 Guangdong Jingyi i.e., Guangdong Jingyi and China Merchants go up and down completely randomly.
Pair Corralation between Guangdong Jingyi and China Merchants
Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 2.05 times more return on investment than China Merchants. However, Guangdong Jingyi is 2.05 times more volatile than China Merchants Bank. It trades about 0.45 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.23 per unit of risk. If you would invest 620.00 in Guangdong Jingyi Metal on November 7, 2024 and sell it today you would earn a total of 109.00 from holding Guangdong Jingyi Metal or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jingyi Metal vs. China Merchants Bank
Performance |
| Timeline |
| Guangdong Jingyi Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| China Merchants Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Guangdong Jingyi and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jingyi and China Merchants
The main advantage of trading using opposite Guangdong Jingyi and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi 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.The idea behind Guangdong Jingyi Metal and China Merchants Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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