Correlation Between China Merchants and Sinomach Automobile
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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
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Sinomach is 0.91. 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
Assuming the 90 days trading horizon China Merchants Shekou is expected to generate 1.24 times more return on investment than Sinomach Automobile. However, China Merchants is 1.24 times more volatile than Sinomach Automobile Co. It trades about 0.14 of its potential returns per unit of risk. Sinomach Automobile Co is currently generating about 0.14 per unit of risk. If you would invest 893.00 in China Merchants Shekou on September 6, 2024 and sell it today you would earn a total of 253.00 from holding China Merchants Shekou or generate 28.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
China Merchants Shekou vs. Sinomach Automobile Co
Performance |
Timeline |
China Merchants Shekou |
Sinomach Automobile |
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.China Merchants vs. Nanjing Putian Telecommunications | China Merchants vs. Tianjin Realty Development | China Merchants vs. Shenyang Huitian Thermal | China Merchants vs. Shenzhen Changfang Light |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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