Correlation Between China Merchants and Sinomach Automobile

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Can any of the company-specific risk be diversified away by investing in both China Merchants and Sinomach Automobile 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 Sinomach Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Shekou and Sinomach Automobile Co, you can compare the effects of market volatilities on China Merchants and Sinomach Automobile 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 Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Sinomach Automobile.

Diversification Opportunities for China Merchants and Sinomach Automobile

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between China and Sinomach is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Shekou and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile 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 Shekou are associated (or correlated) with Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of China Merchants i.e., China Merchants and Sinomach Automobile go up and down completely randomly.

Pair Corralation between China Merchants and Sinomach Automobile

If you would invest  545.00  in Sinomach Automobile Co on September 9, 2024 and sell it today you would earn a total of  133.00  from holding Sinomach Automobile Co or generate 24.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy1.69%
ValuesDaily Returns

China Merchants Shekou  vs.  Sinomach Automobile Co

 Performance 
       Timeline  
China Merchants Shekou 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days China Merchants Shekou has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Merchants is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Sinomach Automobile 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Sinomach Automobile Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomach Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

China Merchants and Sinomach Automobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Merchants and Sinomach Automobile

The main advantage of trading using opposite China Merchants and Sinomach Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Sinomach Automobile 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 Sinomach Automobile will offset losses from the drop in Sinomach Automobile's long position.
The idea behind China Merchants Shekou and Sinomach Automobile Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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