Correlation Between Huafa Industrial and China Merchants
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By analyzing existing cross correlation between Huafa Industrial Co and China Merchants Shekou, you can compare the effects of market volatilities on Huafa Industrial and China Merchants 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 Huafa Industrial with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and China Merchants.
Diversification Opportunities for Huafa Industrial and China Merchants
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Huafa and China is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and China Merchants Shekou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Shekou and Huafa Industrial 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 Huafa Industrial Co are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Shekou has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and China Merchants go up and down completely randomly.
Pair Corralation between Huafa Industrial and China Merchants
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the China Merchants. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 1.28 times less risky than China Merchants. The stock trades about -0.16 of its potential returns per unit of risk. The China Merchants Shekou is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,116 in China Merchants Shekou on August 28, 2024 and sell it today you would lose (50.00) from holding China Merchants Shekou or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. China Merchants Shekou
Performance |
| Timeline |
| Huafa Industrial |
| China Merchants Shekou |
Huafa Industrial and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and China Merchants
The main advantage of trading using opposite Huafa Industrial and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| Huafa Industrial vs. Industrial and Commercial | Huafa Industrial vs. China Construction Bank | Huafa Industrial vs. Bank of China | Huafa Industrial vs. Agricultural Bank of |
| China Merchants vs. China Nonferrous Metal | China Merchants vs. Jinhe Biotechnology Co | China Merchants vs. Zhejiang Yayi Metal | China Merchants vs. Gansu Yasheng Industrial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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