Correlation Between Lyxor 1 and China Merchants
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and China Merchants 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 Lyxor 1 and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and China Merchants Port, you can compare the effects of market volatilities on Lyxor 1 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 Lyxor 1 with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and China Merchants.
Diversification Opportunities for Lyxor 1 and China Merchants
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and China is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and China Merchants Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Port and Lyxor 1 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 Lyxor 1 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 Port has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and China Merchants go up and down completely randomly.
Pair Corralation between Lyxor 1 and China Merchants
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 24.55 times less return on investment than China Merchants. But when comparing it to its historical volatility, Lyxor 1 is 4.92 times less risky than China Merchants. It trades about 0.02 of its potential returns per unit of risk. China Merchants Port is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 24.00 in China Merchants Port on September 3, 2024 and sell it today you would earn a total of 123.00 from holding China Merchants Port or generate 512.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. China Merchants Port
Performance |
| Timeline |
| Lyxor 1 |
| China Merchants Port |
Lyxor 1 and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and China Merchants
The main advantage of trading using opposite Lyxor 1 and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 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.| Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor 1 TecDAX | Lyxor 1 vs. Lyxor UCITS EuroMTS |
| China Merchants vs. Infrastrutture Wireless Italiane | China Merchants vs. 24SEVENOFFICE GROUP AB | China Merchants vs. T MOBILE INCDL 00001 | China Merchants vs. CENTURIA OFFICE REIT |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |