Correlation Between Qingdao Port and China Merchants
Can any of the company-specific risk be diversified away by investing in both Qingdao Port and China Merchants at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Qingdao Port and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qingdao Port International and China Merchants Port, you can compare the effects of market volatilities on Qingdao Port 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 Qingdao Port with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Port and China Merchants.
Diversification Opportunities for Qingdao Port and China Merchants
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Qingdao and China is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Port International and China Merchants Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Port and Qingdao Port 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 Qingdao Port International 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 Port has no effect on the direction of Qingdao Port i.e., Qingdao Port and China Merchants go up and down completely randomly.
Pair Corralation between Qingdao Port and China Merchants
Assuming the 90 days horizon Qingdao Port International is expected to generate 0.64 times more return on investment than China Merchants. However, Qingdao Port International is 1.57 times less risky than China Merchants. It trades about 0.11 of its potential returns per unit of risk. China Merchants Port is currently generating about 0.04 per unit of risk. If you would invest 72.00 in Qingdao Port International on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Qingdao Port International or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qingdao Port International vs. China Merchants Port
Performance |
| Timeline |
| Qingdao Port Interna |
| China Merchants Port |
Qingdao Port and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qingdao Port and China Merchants
The main advantage of trading using opposite Qingdao Port and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingdao Port 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.| Qingdao Port vs. Nippon Yusen Kabushiki | Qingdao Port vs. Hapag Lloyd AG | Qingdao Port vs. Orient Overseas Limited | Qingdao Port vs. Mitsui OSK Lines |
| China Merchants vs. Nippon Yusen Kabushiki | China Merchants vs. Hapag Lloyd AG | China Merchants vs. Orient Overseas Limited | China Merchants vs. Mitsui OSK Lines |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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