Correlation Between China Merchants and Qingdao Port
Can any of the company-specific risk be diversified away by investing in both China Merchants and Qingdao Port 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 Qingdao Port 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 Qingdao Port International, you can compare the effects of market volatilities on China Merchants and Qingdao Port 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 Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Qingdao Port.
Diversification Opportunities for China Merchants and Qingdao Port
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Qingdao is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Port and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna 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 Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of China Merchants i.e., China Merchants and Qingdao Port go up and down completely randomly.
Pair Corralation between China Merchants and Qingdao Port
Assuming the 90 days horizon China Merchants is expected to generate 1.12 times less return on investment than Qingdao Port. But when comparing it to its historical volatility, China Merchants Port is 1.04 times less risky than Qingdao Port. It trades about 0.12 of its potential returns per unit of risk. Qingdao Port International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Qingdao Port International on November 2, 2024 and sell it today you would earn a total of 22.00 from holding Qingdao Port International or generate 43.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Port vs. Qingdao Port International
Performance |
| Timeline |
| China Merchants Port |
| Qingdao Port Interna |
China Merchants and Qingdao Port Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Qingdao Port
The main advantage of trading using opposite China Merchants and Qingdao Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Qingdao Port 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 Qingdao Port will offset losses from the drop in Qingdao Port's long position.| China Merchants vs. Mitsui OSK Lines | China Merchants vs. Superior Plus Corp | China Merchants vs. Origin Agritech | China Merchants vs. Identiv |
| Qingdao Port vs. Mitsui OSK Lines | Qingdao Port vs. Superior Plus Corp | Qingdao Port vs. Origin Agritech | Qingdao Port vs. Identiv |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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