Correlation Between YiDong Electronics and China Merchants
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By analyzing existing cross correlation between YiDong Electronics Technology and China Merchants Bank, you can compare the effects of market volatilities on YiDong Electronics 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 YiDong Electronics with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of YiDong Electronics and China Merchants.
Diversification Opportunities for YiDong Electronics and China Merchants
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YiDong and China is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding YiDong Electronics 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 YiDong Electronics 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 YiDong Electronics 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 YiDong Electronics i.e., YiDong Electronics and China Merchants go up and down completely randomly.
Pair Corralation between YiDong Electronics and China Merchants
Assuming the 90 days trading horizon YiDong Electronics is expected to generate 1.77 times less return on investment than China Merchants. In addition to that, YiDong Electronics is 2.94 times more volatile than China Merchants Bank. It trades about 0.02 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,781 in China Merchants Bank on October 30, 2024 and sell it today you would earn a total of 1,284 from holding China Merchants Bank or generate 46.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YiDong Electronics Technology vs. China Merchants Bank
Performance |
| Timeline |
| YiDong Electronics |
| China Merchants Bank |
YiDong Electronics and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YiDong Electronics and China Merchants
The main advantage of trading using opposite YiDong Electronics and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YiDong Electronics 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.| YiDong Electronics vs. Zhengzhou Coal Mining | YiDong Electronics vs. Shenyang Blue Silver | YiDong Electronics vs. XinJiang GuoTong Pipeline | YiDong Electronics vs. Jiangxi Naipu Mining |
| China Merchants vs. Tongling Nonferrous Metals | China Merchants vs. Guangdong Jingyi Metal | China Merchants vs. China Aluminum International | China Merchants vs. Pengxin International Mining |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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