Correlation Between DAX Index and China Merchants
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By analyzing existing cross correlation between DAX Index and China Merchants Port, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and China Merchants.
Diversification Opportunities for DAX Index and China Merchants
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DAX and China is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and China Merchants go up and down completely randomly.
Pair Corralation between DAX Index and China Merchants
Assuming the 90 days trading horizon DAX Index is expected to generate 0.76 times more return on investment than China Merchants. However, DAX Index is 1.32 times less risky than China Merchants. It trades about 0.2 of its potential returns per unit of risk. China Merchants Port is currently generating about -0.16 per unit of risk. If you would invest 1,914,785 in DAX Index on September 4, 2024 and sell it today you would earn a total of 78,577 from holding DAX Index or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. China Merchants Port
Performance |
| Timeline |
DAX Index and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
China Merchants Port
Pair trading matchups for China Merchants
Pair Trading with DAX Index and China Merchants
The main advantage of trading using opposite DAX Index and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. LION ONE METALS | DAX Index vs. KENNAMETAL INC | DAX Index vs. HYATT HOTELS A | DAX Index vs. Zijin Mining Group |
| China Merchants vs. Compagnie Plastic Omnium | China Merchants vs. PennantPark Investment | China Merchants vs. Gladstone Investment | China Merchants vs. Eagle Materials |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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