Correlation Between China Merchants and Songz Automobile
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By analyzing existing cross correlation between China Merchants Bank and Songz Automobile Air, you can compare the effects of market volatilities on China Merchants and Songz Automobile 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 Songz Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Songz Automobile.
Diversification Opportunities for China Merchants and Songz Automobile
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Songz is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Songz Automobile Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songz Automobile Air 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 Songz Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songz Automobile Air has no effect on the direction of China Merchants i.e., China Merchants and Songz Automobile go up and down completely randomly.
Pair Corralation between China Merchants and Songz Automobile
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.6 times more return on investment than Songz Automobile. However, China Merchants Bank is 1.66 times less risky than Songz Automobile. It trades about 0.03 of its potential returns per unit of risk. Songz Automobile Air is currently generating about 0.01 per unit of risk. If you would invest 3,230 in China Merchants Bank on August 31, 2024 and sell it today you would earn a total of 404.00 from holding China Merchants Bank or generate 12.51% 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. Songz Automobile Air
Performance |
| Timeline |
| China Merchants Bank |
| Songz Automobile Air |
China Merchants and Songz Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Songz Automobile
The main advantage of trading using opposite China Merchants and Songz Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Songz Automobile 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 Songz Automobile will offset losses from the drop in Songz Automobile's long position.| China Merchants vs. Marssenger Kitchenware Co | China Merchants vs. Maccura Biotechnology Co | China Merchants vs. Shanghai Rightongene Biotechnology | China Merchants vs. Fujian Longzhou Transportation |
| Songz Automobile vs. China State Construction | Songz Automobile vs. China Merchants Shekou | Songz Automobile vs. Huafa Industrial Co | Songz Automobile vs. China International Capital |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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