Correlation Between China Merchants and Xizi Clean
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By analyzing existing cross correlation between China Merchants Bank and Xizi Clean Energy, you can compare the effects of market volatilities on China Merchants and Xizi Clean 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 Xizi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Xizi Clean.
Diversification Opportunities for China Merchants and Xizi Clean
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Xizi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Xizi Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xizi Clean Energy 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 Xizi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xizi Clean Energy has no effect on the direction of China Merchants i.e., China Merchants and Xizi Clean go up and down completely randomly.
Pair Corralation between China Merchants and Xizi Clean
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.66 times more return on investment than Xizi Clean. However, China Merchants Bank is 1.52 times less risky than Xizi Clean. It trades about -0.21 of its potential returns per unit of risk. Xizi Clean Energy is currently generating about -0.18 per unit of risk. If you would invest 3,852 in China Merchants Bank on August 28, 2024 and sell it today you would lose (230.00) from holding China Merchants Bank or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Xizi Clean Energy
Performance |
| Timeline |
| China Merchants Bank |
| Xizi Clean Energy |
China Merchants and Xizi Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Xizi Clean
The main advantage of trading using opposite China Merchants and Xizi Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Xizi Clean 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 Xizi Clean will offset losses from the drop in Xizi Clean's long position.| China Merchants vs. Oppein Home Group | China Merchants vs. Xiamen Goldenhome Co | China Merchants vs. Hubei Geoway Investment | China Merchants vs. Harbin Hatou Investment |
| Xizi Clean vs. Shenzhen Kexin Communication | Xizi Clean vs. Gome Telecom Equipment | Xizi Clean vs. Zhejiang Qianjiang Motorcycle | Xizi Clean vs. Wuhan Yangtze Communication |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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