Correlation Between China Merchants and Sinotrans
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By analyzing existing cross correlation between China Merchants Bank and Sinotrans Ltd Class, you can compare the effects of market volatilities on China Merchants and Sinotrans 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 Sinotrans. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Sinotrans.
Diversification Opportunities for China Merchants and Sinotrans
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Sinotrans is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Sinotrans Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotrans Class 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 Sinotrans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotrans Class has no effect on the direction of China Merchants i.e., China Merchants and Sinotrans go up and down completely randomly.
Pair Corralation between China Merchants and Sinotrans
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 1.35 times more return on investment than Sinotrans. However, China Merchants is 1.35 times more volatile than Sinotrans Ltd Class. It trades about 0.25 of its potential returns per unit of risk. Sinotrans Ltd Class is currently generating about 0.13 per unit of risk. If you would invest 3,660 in China Merchants Bank on September 28, 2024 and sell it today you would earn a total of 288.00 from holding China Merchants Bank or generate 7.87% 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. Sinotrans Ltd Class
Performance |
| Timeline |
| China Merchants Bank |
| Sinotrans Class |
China Merchants and Sinotrans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Sinotrans
The main advantage of trading using opposite China Merchants and Sinotrans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Sinotrans 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 Sinotrans will offset losses from the drop in Sinotrans' long position.| China Merchants vs. Kweichow Moutai Co | China Merchants vs. Contemporary Amperex Technology | China Merchants vs. G bits Network Technology | China Merchants vs. BYD Co Ltd |
| Sinotrans vs. Ming Yang Smart | Sinotrans vs. 159681 | Sinotrans vs. 159005 | Sinotrans vs. Loctek Ergonomic Technology |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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