Correlation Between China Merchants and Xiwang Foodstuffs
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By analyzing existing cross correlation between China Merchants Bank and Xiwang Foodstuffs Co, you can compare the effects of market volatilities on China Merchants and Xiwang Foodstuffs 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 Xiwang Foodstuffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Xiwang Foodstuffs.
Diversification Opportunities for China Merchants and Xiwang Foodstuffs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Xiwang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Xiwang Foodstuffs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiwang Foodstuffs 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 Xiwang Foodstuffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiwang Foodstuffs has no effect on the direction of China Merchants i.e., China Merchants and Xiwang Foodstuffs go up and down completely randomly.
Pair Corralation between China Merchants and Xiwang Foodstuffs
Assuming the 90 days trading horizon China Merchants Bank is expected to under-perform the Xiwang Foodstuffs. But the stock apears to be less risky and, when comparing its historical volatility, China Merchants Bank is 4.83 times less risky than Xiwang Foodstuffs. The stock trades about -0.09 of its potential returns per unit of risk. The Xiwang Foodstuffs Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Xiwang Foodstuffs Co on September 1, 2024 and sell it today you would earn a total of 105.00 from holding Xiwang Foodstuffs Co or generate 33.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Xiwang Foodstuffs Co
Performance |
| Timeline |
| China Merchants Bank |
| Xiwang Foodstuffs |
China Merchants and Xiwang Foodstuffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Xiwang Foodstuffs
The main advantage of trading using opposite China Merchants and Xiwang Foodstuffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Xiwang Foodstuffs 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 Xiwang Foodstuffs will offset losses from the drop in Xiwang Foodstuffs' long position.| China Merchants vs. Yunnan Jianzhijia Health Chain | China Merchants vs. Mingchen Health Co | China Merchants vs. XinJiang GuoTong Pipeline | China Merchants vs. Healthcare Co |
| Xiwang Foodstuffs vs. Nanjing Putian Telecommunications | Xiwang Foodstuffs vs. Shenzhen Hifuture Electric | Xiwang Foodstuffs vs. Tianjin Realty Development | Xiwang Foodstuffs vs. Shenyang Huitian Thermal |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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