Correlation Between Shanghai Pudong and China Merchants
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By analyzing existing cross correlation between Shanghai Pudong Development and China Merchants Bank, you can compare the effects of market volatilities on Shanghai Pudong 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 Shanghai Pudong with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and China Merchants.
Diversification Opportunities for Shanghai Pudong and China Merchants
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shanghai and China is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development 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 Shanghai Pudong 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 Shanghai Pudong Development 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 Shanghai Pudong i.e., Shanghai Pudong and China Merchants go up and down completely randomly.
Pair Corralation between Shanghai Pudong and China Merchants
Assuming the 90 days trading horizon Shanghai Pudong Development is expected to generate 0.85 times more return on investment than China Merchants. However, Shanghai Pudong Development is 1.17 times less risky than China Merchants. It trades about 0.12 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.05 per unit of risk. If you would invest 714.00 in Shanghai Pudong Development on August 25, 2024 and sell it today you would earn a total of 234.00 from holding Shanghai Pudong Development or generate 32.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Pudong Development vs. China Merchants Bank
Performance |
| Timeline |
| Shanghai Pudong Deve |
| China Merchants Bank |
Shanghai Pudong and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pudong and China Merchants
The main advantage of trading using opposite Shanghai Pudong and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong 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.| Shanghai Pudong vs. Fujian Longzhou Transportation | Shanghai Pudong vs. Tianshui Huatian Technology | Shanghai Pudong vs. Western Superconducting Tech | Shanghai Pudong vs. Saurer Intelligent Technology |
| China Merchants vs. Jiangxi Hengda Hi Tech | China Merchants vs. Fiberhome Telecommunication Technologies | China Merchants vs. Wuhan Yangtze Communication | China Merchants vs. Tongyu Communication |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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