Correlation Between China Merchants and Sichuan Furong
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By analyzing existing cross correlation between China Merchants Bank and Sichuan Furong Technology, you can compare the effects of market volatilities on China Merchants and Sichuan Furong 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 Sichuan Furong. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Sichuan Furong.
Diversification Opportunities for China Merchants and Sichuan Furong
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Sichuan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Sichuan Furong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Furong Technology 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 Sichuan Furong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Furong Technology has no effect on the direction of China Merchants i.e., China Merchants and Sichuan Furong go up and down completely randomly.
Pair Corralation between China Merchants and Sichuan Furong
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 0.65 times more return on investment than Sichuan Furong. However, China Merchants Bank is 1.53 times less risky than Sichuan Furong. It trades about 0.26 of its potential returns per unit of risk. Sichuan Furong Technology is currently generating about -0.13 per unit of risk. If you would invest 3,639 in China Merchants Bank on September 27, 2024 and sell it today you would earn a total of 301.00 from holding China Merchants Bank or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Merchants Bank vs. Sichuan Furong Technology
Performance |
| Timeline |
| China Merchants Bank |
| Sichuan Furong Technology |
China Merchants and Sichuan Furong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Sichuan Furong
The main advantage of trading using opposite China Merchants and Sichuan Furong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Sichuan Furong 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 Sichuan Furong will offset losses from the drop in Sichuan Furong's 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 |
| Sichuan Furong vs. Bank of China | Sichuan Furong vs. Kweichow Moutai Co | Sichuan Furong vs. PetroChina Co Ltd | Sichuan Furong vs. Bank of Communications |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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