Correlation Between Datang HuaYin and China Merchants
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By analyzing existing cross correlation between Datang HuaYin Electric and China Merchants Bank, you can compare the effects of market volatilities on Datang HuaYin 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 Datang HuaYin with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang HuaYin and China Merchants.
Diversification Opportunities for Datang HuaYin and China Merchants
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Datang and China is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Datang HuaYin Electric 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 Datang HuaYin 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 Datang HuaYin Electric 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 Datang HuaYin i.e., Datang HuaYin and China Merchants go up and down completely randomly.
Pair Corralation between Datang HuaYin and China Merchants
Assuming the 90 days trading horizon Datang HuaYin Electric is expected to generate 1.51 times more return on investment than China Merchants. However, Datang HuaYin is 1.51 times more volatile than China Merchants Bank. It trades about -0.05 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.09 per unit of risk. If you would invest 348.00 in Datang HuaYin Electric on September 1, 2024 and sell it today you would lose (8.00) from holding Datang HuaYin Electric or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang HuaYin Electric vs. China Merchants Bank
Performance |
| Timeline |
| Datang HuaYin Electric |
| China Merchants Bank |
Datang HuaYin and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang HuaYin and China Merchants
The main advantage of trading using opposite Datang HuaYin and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang HuaYin 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.| Datang HuaYin vs. Chengdu Kanghua Biological | Datang HuaYin vs. Beijing Wantai Biological | Datang HuaYin vs. Suzhou Novoprotein Scientific | Datang HuaYin vs. Aluminum Corp of |
| China Merchants vs. Yunnan Jianzhijia Health Chain | China Merchants vs. Mingchen Health Co | China Merchants vs. XinJiang GuoTong Pipeline | China Merchants vs. Healthcare Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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