Correlation Between China Merchants and Hapag Lloyd
Can any of the company-specific risk be diversified away by investing in both China Merchants and Hapag Lloyd at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Merchants and Hapag Lloyd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Port and Hapag Lloyd Aktiengesellschaft, you can compare the effects of market volatilities on China Merchants and Hapag Lloyd 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 Hapag Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Hapag Lloyd.
Diversification Opportunities for China Merchants and Hapag Lloyd
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Hapag is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Port and Hapag Lloyd Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd Aktienge 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 Port are associated (or correlated) with Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd Aktienge has no effect on the direction of China Merchants i.e., China Merchants and Hapag Lloyd go up and down completely randomly.
Pair Corralation between China Merchants and Hapag Lloyd
Assuming the 90 days horizon China Merchants is expected to generate 1.6 times less return on investment than Hapag Lloyd. But when comparing it to its historical volatility, China Merchants Port is 1.66 times less risky than Hapag Lloyd. It trades about 0.05 of its potential returns per unit of risk. Hapag Lloyd Aktiengesellschaft is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,839 in Hapag Lloyd Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 934.00 from holding Hapag Lloyd Aktiengesellschaft or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.46% |
| Values | Daily Returns |
China Merchants Port vs. Hapag Lloyd Aktiengesellschaft
Performance |
| Timeline |
| China Merchants Port |
| Hapag Lloyd Aktienge |
China Merchants and Hapag Lloyd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Hapag Lloyd
The main advantage of trading using opposite China Merchants and Hapag Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Hapag Lloyd 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 Hapag Lloyd will offset losses from the drop in Hapag Lloyd's long position.| China Merchants vs. Genco Shipping Trading | China Merchants vs. Golden Ocean Group | China Merchants vs. Star Bulk Carriers | China Merchants vs. Oceanpal |
| Hapag Lloyd vs. AP Moeller Maersk AS | Hapag Lloyd vs. Nippon Yusen Kabushiki | Hapag Lloyd vs. COSCO SHIPPING Holdings | Hapag Lloyd vs. AP Moeller |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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