Correlation Between New China and Shenzhen Mindray
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By analyzing existing cross correlation between New China Life and Shenzhen Mindray Bio Medical, you can compare the effects of market volatilities on New China and Shenzhen Mindray 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 New China with a short position of Shenzhen Mindray. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Shenzhen Mindray.
Diversification Opportunities for New China and Shenzhen Mindray
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Shenzhen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Shenzhen Mindray Bio Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Mindray Bio and New China 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 New China Life are associated (or correlated) with Shenzhen Mindray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Mindray Bio has no effect on the direction of New China i.e., New China and Shenzhen Mindray go up and down completely randomly.
Pair Corralation between New China and Shenzhen Mindray
Assuming the 90 days trading horizon New China Life is expected to generate 1.23 times more return on investment than Shenzhen Mindray. However, New China is 1.23 times more volatile than Shenzhen Mindray Bio Medical. It trades about 0.06 of its potential returns per unit of risk. Shenzhen Mindray Bio Medical is currently generating about -0.01 per unit of risk. If you would invest 3,117 in New China Life on September 26, 2024 and sell it today you would earn a total of 1,992 from holding New China Life or generate 63.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Shenzhen Mindray Bio Medical
Performance |
| Timeline |
| New China Life |
| Shenzhen Mindray Bio |
New China and Shenzhen Mindray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Shenzhen Mindray
The main advantage of trading using opposite New China and Shenzhen Mindray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Shenzhen Mindray 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 Shenzhen Mindray will offset losses from the drop in Shenzhen Mindray's long position.| New China vs. Kweichow Moutai Co | New China vs. Shenzhen Mindray Bio Medical | New China vs. Jiangsu Pacific Quartz | New China vs. G bits Network Technology |
| Shenzhen Mindray vs. New China Life | Shenzhen Mindray vs. Ming Yang Smart | Shenzhen Mindray vs. 159681 | Shenzhen Mindray vs. 159005 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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