Correlation Between Guangdong Qunxing and China Merchants
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By analyzing existing cross correlation between Guangdong Qunxing Toys and China Merchants Bank, you can compare the effects of market volatilities on Guangdong Qunxing 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 Qunxing with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Qunxing and China Merchants.
Diversification Opportunities for Guangdong Qunxing and China Merchants
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guangdong and China is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Qunxing Toys 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 Qunxing 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 Qunxing Toys 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 Qunxing i.e., Guangdong Qunxing and China Merchants go up and down completely randomly.
Pair Corralation between Guangdong Qunxing and China Merchants
Assuming the 90 days trading horizon Guangdong Qunxing Toys is expected to under-perform the China Merchants. In addition to that, Guangdong Qunxing is 3.77 times more volatile than China Merchants Bank. It trades about -0.29 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.29 per unit of volatility. If you would invest 3,851 in China Merchants Bank on November 3, 2024 and sell it today you would earn a total of 214.00 from holding China Merchants Bank or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Qunxing Toys vs. China Merchants Bank
Performance |
| Timeline |
| Guangdong Qunxing Toys |
| China Merchants Bank |
Guangdong Qunxing and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Qunxing and China Merchants
The main advantage of trading using opposite Guangdong Qunxing and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Qunxing 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.| Guangdong Qunxing vs. New China Life | Guangdong Qunxing vs. Ming Yang Smart | Guangdong Qunxing vs. 159681 | Guangdong Qunxing vs. 159005 |
| China Merchants vs. Thinkon Semiconductor Jinzhou | China Merchants vs. Linzhou Heavy Machinery | China Merchants vs. Anhui Huilong Agricultural | China Merchants vs. Shantui Construction Machinery |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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