Correlation Between China Asset and China Merchants
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By analyzing existing cross correlation between China Asset Management and China Merchants Bank, you can compare the effects of market volatilities on China Asset 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 China Asset with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Asset and China Merchants.
Diversification Opportunities for China Asset and China Merchants
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Asset Management and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and China Asset 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 Asset Management 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 Bank has no effect on the direction of China Asset i.e., China Asset and China Merchants go up and down completely randomly.
Pair Corralation between China Asset and China Merchants
Assuming the 90 days trading horizon China Asset Management is expected to generate 0.79 times more return on investment than China Merchants. However, China Asset Management is 1.26 times less risky than China Merchants. It trades about 0.24 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.03 per unit of risk. If you would invest 314.00 in China Asset Management on September 25, 2024 and sell it today you would earn a total of 37.00 from holding China Asset Management or generate 11.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Asset Management vs. China Merchants Bank
Performance |
Timeline |
China Asset Management |
China Merchants Bank |
China Asset and China Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Asset and China Merchants
The main advantage of trading using opposite China Asset and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Asset 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.China Asset vs. Qumei Furniture Group | China Asset vs. Vohringer Home Technology | China Asset vs. Xilinmen Furniture Co | China Asset vs. Kuang Chi Technologies |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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