Correlation Between China Merchants and Tianjin Hi
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By analyzing existing cross correlation between China Merchants Bank and Tianjin Hi Tech Development, you can compare the effects of market volatilities on China Merchants and Tianjin Hi 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 Tianjin Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Tianjin Hi.
Diversification Opportunities for China Merchants and Tianjin Hi
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Tianjin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Tianjin Hi Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Hi Tech 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 Tianjin Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Hi Tech has no effect on the direction of China Merchants i.e., China Merchants and Tianjin Hi go up and down completely randomly.
Pair Corralation between China Merchants and Tianjin Hi
Assuming the 90 days trading horizon China Merchants Bank is expected to under-perform the Tianjin Hi. But the stock apears to be less risky and, when comparing its historical volatility, China Merchants Bank is 2.9 times less risky than Tianjin Hi. The stock trades about -0.24 of its potential returns per unit of risk. The Tianjin Hi Tech Development is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 261.00 in Tianjin Hi Tech Development on August 25, 2024 and sell it today you would earn a total of 36.00 from holding Tianjin Hi Tech Development or generate 13.79% 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. Tianjin Hi Tech Development
Performance |
| Timeline |
| China Merchants Bank |
| Tianjin Hi Tech |
China Merchants and Tianjin Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Tianjin Hi
The main advantage of trading using opposite China Merchants and Tianjin Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Tianjin Hi 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 Tianjin Hi will offset losses from the drop in Tianjin Hi's long position.| China Merchants vs. Dymatic Chemicals | China Merchants vs. Semiconductor Manufacturing Electronics | China Merchants vs. Double Medical Technology | China Merchants vs. CareRay Digital Medical |
| Tianjin Hi vs. Olympic Circuit Technology | Tianjin Hi vs. Hainan Airlines Co | Tianjin Hi vs. Sportsoul Co Ltd | Tianjin Hi vs. Linewell Software 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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