Correlation Between China Merchants and Shandong Sino-Agri
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By analyzing existing cross correlation between China Merchants Bank and Shandong Sino Agri United, you can compare the effects of market volatilities on China Merchants and Shandong Sino-Agri 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 Shandong Sino-Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Shandong Sino-Agri.
Diversification Opportunities for China Merchants and Shandong Sino-Agri
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Shandong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Shandong Sino Agri United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sino Agri 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 Shandong Sino-Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sino Agri has no effect on the direction of China Merchants i.e., China Merchants and Shandong Sino-Agri go up and down completely randomly.
Pair Corralation between China Merchants and Shandong Sino-Agri
Assuming the 90 days trading horizon China Merchants is expected to generate 4.22 times less return on investment than Shandong Sino-Agri. But when comparing it to its historical volatility, China Merchants Bank is 1.71 times less risky than Shandong Sino-Agri. It trades about 0.04 of its potential returns per unit of risk. Shandong Sino Agri United is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,345 in Shandong Sino Agri United on September 1, 2024 and sell it today you would earn a total of 452.00 from holding Shandong Sino Agri United or generate 33.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Shandong Sino Agri United
Performance |
| Timeline |
| China Merchants Bank |
| Shandong Sino Agri |
China Merchants and Shandong Sino-Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Shandong Sino-Agri
The main advantage of trading using opposite China Merchants and Shandong Sino-Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Shandong Sino-Agri 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 Shandong Sino-Agri will offset losses from the drop in Shandong Sino-Agri's 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 |
| Shandong Sino-Agri vs. Zijin Mining Group | Shandong Sino-Agri vs. Wanhua Chemical Group | Shandong Sino-Agri vs. Baoshan Iron Steel | Shandong Sino-Agri 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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