Correlation Between China Merchants and China Reform
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By analyzing existing cross correlation between China Merchants Bank and China Reform Health, you can compare the effects of market volatilities on China Merchants and China Reform 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 China Merchants with a short position of China Reform. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and China Reform.
Diversification Opportunities for China Merchants and China Reform
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and China Reform Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reform Health and China Merchants 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 China Merchants Bank are associated (or correlated) with China Reform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reform Health has no effect on the direction of China Merchants i.e., China Merchants and China Reform go up and down completely randomly.
Pair Corralation between China Merchants and China Reform
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.44 times more return on investment than China Reform. However, China Merchants Bank is 2.29 times less risky than China Reform. It trades about 0.04 of its potential returns per unit of risk. China Reform Health is currently generating about 0.01 per unit of risk. If you would invest 3,235 in China Merchants Bank on November 27, 2024 and sell it today you would earn a total of 892.00 from holding China Merchants Bank or generate 27.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. China Reform Health
Performance |
| Timeline |
| China Merchants Bank |
| China Reform Health |
China Merchants and China Reform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and China Reform
The main advantage of trading using opposite China Merchants and China Reform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, China Reform 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 Reform will offset losses from the drop in China Reform's long position.| China Merchants vs. Guangzhou KingTeller Technology | China Merchants vs. Eyebright Medical Technology | China Merchants vs. Hubei Huaqiang High Tech | China Merchants vs. Linewell Software Co |
| China Reform vs. Goldlok Toys Holdings | China Reform vs. Jiangxi JDL Environmental | China Reform vs. Shenzhen Topway Video | China Reform vs. Innovative Medical Management |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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