Correlation Between Metro Investment and China Merchants
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By analyzing existing cross correlation between Metro Investment Development and China Merchants Bank, you can compare the effects of market volatilities on Metro Investment 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 Metro Investment with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Investment and China Merchants.
Diversification Opportunities for Metro Investment and China Merchants
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metro and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Metro Investment Development and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and Metro Investment 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 Metro Investment Development 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 Bank has no effect on the direction of Metro Investment i.e., Metro Investment and China Merchants go up and down completely randomly.
Pair Corralation between Metro Investment and China Merchants
Assuming the 90 days trading horizon Metro Investment Development is expected to generate 2.34 times more return on investment than China Merchants. However, Metro Investment is 2.34 times more volatile than China Merchants Bank. It trades about 0.02 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.01 per unit of risk. If you would invest 452.00 in Metro Investment Development on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Metro Investment Development or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Investment Development vs. China Merchants Bank
Performance |
| Timeline |
| Metro Investment Dev |
| China Merchants Bank |
Metro Investment and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Investment and China Merchants
The main advantage of trading using opposite Metro Investment and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Investment 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.| Metro Investment vs. Industrial and Commercial | Metro Investment vs. China Construction Bank | Metro Investment vs. Bank of China | Metro Investment vs. Agricultural Bank of |
| China Merchants vs. Hainan Mining Co | China Merchants vs. Shengda Mining Co | China Merchants vs. Jonjee Hi tech Industrial | China Merchants vs. Tianjin Hi Tech Development |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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