Correlation Between China Merchants and Xiangtan Electrochemical
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By analyzing existing cross correlation between China Merchants Bank and Xiangtan Electrochemical Scientific, you can compare the effects of market volatilities on China Merchants and Xiangtan Electrochemical 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 Xiangtan Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Xiangtan Electrochemical.
Diversification Opportunities for China Merchants and Xiangtan Electrochemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Xiangtan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Xiangtan Electrochemical Scien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangtan Electrochemical 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 Xiangtan Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangtan Electrochemical has no effect on the direction of China Merchants i.e., China Merchants and Xiangtan Electrochemical go up and down completely randomly.
Pair Corralation between China Merchants and Xiangtan Electrochemical
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.54 times more return on investment than Xiangtan Electrochemical. However, China Merchants Bank is 1.84 times less risky than Xiangtan Electrochemical. It trades about 0.03 of its potential returns per unit of risk. Xiangtan Electrochemical Scientific is currently generating about 0.01 per unit of risk. If you would invest 3,196 in China Merchants Bank on September 2, 2024 and sell it today you would earn a total of 438.00 from holding China Merchants Bank or generate 13.7% 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. Xiangtan Electrochemical Scien
Performance |
| Timeline |
| China Merchants Bank |
| Xiangtan Electrochemical |
China Merchants and Xiangtan Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Xiangtan Electrochemical
The main advantage of trading using opposite China Merchants and Xiangtan Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Xiangtan Electrochemical 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 Xiangtan Electrochemical will offset losses from the drop in Xiangtan Electrochemical's long position.| China Merchants vs. Uroica Mining Safety | China Merchants vs. Guangdong Silvere Sci | China Merchants vs. Cultural Investment Holdings | China Merchants vs. Metro Investment Development |
| Xiangtan Electrochemical vs. Zijin Mining Group | Xiangtan Electrochemical vs. Wanhua Chemical Group | Xiangtan Electrochemical vs. Baoshan Iron Steel | Xiangtan Electrochemical vs. Shandong Gold 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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