Correlation Between China Merchants and Penghua Shenzhen
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By analyzing existing cross correlation between China Merchants Bank and Penghua Shenzhen Energy, you can compare the effects of market volatilities on China Merchants and Penghua Shenzhen 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 Penghua Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Penghua Shenzhen.
Diversification Opportunities for China Merchants and Penghua Shenzhen
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Penghua is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Penghua Shenzhen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penghua Shenzhen 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 Penghua Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penghua Shenzhen Energy has no effect on the direction of China Merchants i.e., China Merchants and Penghua Shenzhen go up and down completely randomly.
Pair Corralation between China Merchants and Penghua Shenzhen
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 1.96 times more return on investment than Penghua Shenzhen. However, China Merchants is 1.96 times more volatile than Penghua Shenzhen Energy. It trades about 0.06 of its potential returns per unit of risk. Penghua Shenzhen Energy is currently generating about 0.08 per unit of risk. If you would invest 3,042 in China Merchants Bank on August 29, 2024 and sell it today you would earn a total of 597.00 from holding China Merchants Bank or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Penghua Shenzhen Energy
Performance |
| Timeline |
| China Merchants Bank |
| Penghua Shenzhen Energy |
China Merchants and Penghua Shenzhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Penghua Shenzhen
The main advantage of trading using opposite China Merchants and Penghua Shenzhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Penghua Shenzhen 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 Penghua Shenzhen will offset losses from the drop in Penghua Shenzhen's long position.| China Merchants vs. Sunwave Communications Co | China Merchants vs. Goldlok Toys Holdings | China Merchants vs. Eastern Communications Co | China Merchants vs. Wuhan Yangtze Communication |
| Penghua Shenzhen vs. Zhongtong Guomai Communication | Penghua Shenzhen vs. Bus Online Co | Penghua Shenzhen vs. Guangzhou Dongfang Hotel | Penghua Shenzhen vs. Eastern Communications 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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