Correlation Between China Merchants and Guangzhou Haozhi
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By analyzing existing cross correlation between China Merchants Bank and Guangzhou Haozhi Industrial, you can compare the effects of market volatilities on China Merchants and Guangzhou Haozhi 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 Guangzhou Haozhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Guangzhou Haozhi.
Diversification Opportunities for China Merchants and Guangzhou Haozhi
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Guangzhou is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Guangzhou Haozhi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haozhi Ind 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 Guangzhou Haozhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haozhi Ind has no effect on the direction of China Merchants i.e., China Merchants and Guangzhou Haozhi go up and down completely randomly.
Pair Corralation between China Merchants and Guangzhou Haozhi
Assuming the 90 days trading horizon China Merchants is expected to generate 6.37 times less return on investment than Guangzhou Haozhi. But when comparing it to its historical volatility, China Merchants Bank is 2.12 times less risky than Guangzhou Haozhi. It trades about 0.03 of its potential returns per unit of risk. Guangzhou Haozhi Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Guangzhou Haozhi Industrial on August 25, 2024 and sell it today you would earn a total of 426.00 from holding Guangzhou Haozhi Industrial or generate 31.56% 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. Guangzhou Haozhi Industrial
Performance |
| Timeline |
| China Merchants Bank |
| Guangzhou Haozhi Ind |
China Merchants and Guangzhou Haozhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Guangzhou Haozhi
The main advantage of trading using opposite China Merchants and Guangzhou Haozhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Guangzhou Haozhi 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 Guangzhou Haozhi will offset losses from the drop in Guangzhou Haozhi's long position.| China Merchants vs. Jiangxi Hengda Hi Tech | China Merchants vs. Fiberhome Telecommunication Technologies | China Merchants vs. Wuhan Yangtze Communication | China Merchants vs. Tongyu Communication |
| Guangzhou Haozhi vs. Biwin Storage Technology | Guangzhou Haozhi vs. PetroChina Co Ltd | Guangzhou Haozhi vs. Industrial and Commercial | Guangzhou Haozhi vs. China Construction Bank |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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