Correlation Between China Merchants and Aofu Environmental
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By analyzing existing cross correlation between China Merchants Bank and Aofu Environmental Technology, you can compare the effects of market volatilities on China Merchants and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Aofu Environmental.
Diversification Opportunities for China Merchants and Aofu Environmental
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Aofu is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of China Merchants i.e., China Merchants and Aofu Environmental go up and down completely randomly.
Pair Corralation between China Merchants and Aofu Environmental
Assuming the 90 days trading horizon China Merchants is expected to generate 2.67 times less return on investment than Aofu Environmental. But when comparing it to its historical volatility, China Merchants Bank is 2.25 times less risky than Aofu Environmental. It trades about 0.31 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,025 in Aofu Environmental Technology on November 29, 2024 and sell it today you would earn a total of 103.00 from holding Aofu Environmental Technology or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Aofu Environmental Technology
Performance |
| Timeline |
| China Merchants Bank |
| Aofu Environmental |
China Merchants and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Aofu Environmental
The main advantage of trading using opposite China Merchants and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.| China Merchants vs. Beijing HuaYuanYiTong Thermal | China Merchants vs. Jiangxi Copper Co | China Merchants vs. Zijin Mining Group | China Merchants vs. Rising Nonferrous Metals |
| Aofu Environmental vs. Huawen Media Investment | Aofu Environmental vs. Shandong Longquan Pipeline | Aofu Environmental vs. Xiangyang Automobile Bearing | Aofu Environmental vs. Hubei Geoway Investment |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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