Correlation Between Chinese Maritime and China Metal
Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and China Metal 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 Chinese Maritime and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Maritime Transport and China Metal Products, you can compare the effects of market volatilities on Chinese Maritime and China Metal 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 Chinese Maritime with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and China Metal.
Diversification Opportunities for Chinese Maritime and China Metal
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chinese and China is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and China Metal go up and down completely randomly.
Pair Corralation between Chinese Maritime and China Metal
Assuming the 90 days trading horizon Chinese Maritime Transport is expected to generate 1.18 times more return on investment than China Metal. However, Chinese Maritime is 1.18 times more volatile than China Metal Products. It trades about 0.03 of its potential returns per unit of risk. China Metal Products is currently generating about 0.0 per unit of risk. If you would invest 4,000 in Chinese Maritime Transport on November 28, 2024 and sell it today you would earn a total of 750.00 from holding Chinese Maritime Transport or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Maritime Transport vs. China Metal Products
Performance |
| Timeline |
| Chinese Maritime Tra |
| China Metal Products |
Chinese Maritime and China Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Maritime and China Metal
The main advantage of trading using opposite Chinese Maritime and China Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, China Metal 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 Metal will offset losses from the drop in China Metal's long position.| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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