Correlation Between China Merchants and Huadong Medicine
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By analyzing existing cross correlation between China Merchants Bank and Huadong Medicine Co, you can compare the effects of market volatilities on China Merchants and Huadong Medicine 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 Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Huadong Medicine.
Diversification Opportunities for China Merchants and Huadong Medicine
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Huadong is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine 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 Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of China Merchants i.e., China Merchants and Huadong Medicine go up and down completely randomly.
Pair Corralation between China Merchants and Huadong Medicine
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.68 times more return on investment than Huadong Medicine. However, China Merchants Bank is 1.47 times less risky than Huadong Medicine. It trades about 0.0 of its potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.02 per unit of risk. If you would invest 3,933 in China Merchants Bank on October 14, 2024 and sell it today you would lose (35.00) from holding China Merchants Bank or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Huadong Medicine Co
Performance |
| Timeline |
| China Merchants Bank |
| Huadong Medicine |
China Merchants and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Huadong Medicine
The main advantage of trading using opposite China Merchants and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| China Merchants vs. Ningxia Younglight Chemicals | China Merchants vs. Xiangtan Electrochemical Scientific | China Merchants vs. Shenyang Chemical Industry | China Merchants vs. Dosilicon Co |
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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