Correlation Between Eastern Communications and China Merchants
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By analyzing existing cross correlation between Eastern Communications Co and China Merchants Shekou, you can compare the effects of market volatilities on Eastern Communications 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 Eastern Communications with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and China Merchants.
Diversification Opportunities for Eastern Communications and China Merchants
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and China is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and China Merchants Shekou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Shekou and Eastern Communications 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 Eastern Communications Co 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 Shekou has no effect on the direction of Eastern Communications i.e., Eastern Communications and China Merchants go up and down completely randomly.
Pair Corralation between Eastern Communications and China Merchants
Assuming the 90 days trading horizon Eastern Communications Co is expected to generate 0.84 times more return on investment than China Merchants. However, Eastern Communications Co is 1.19 times less risky than China Merchants. It trades about 0.01 of its potential returns per unit of risk. China Merchants Shekou is currently generating about 0.0 per unit of risk. If you would invest 40.00 in Eastern Communications Co on September 25, 2024 and sell it today you would earn a total of 1.00 from holding Eastern Communications Co or generate 2.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Eastern Communications Co vs. China Merchants Shekou
Performance |
Timeline |
Eastern Communications |
China Merchants Shekou |
Eastern Communications and China Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eastern Communications and China Merchants
The main advantage of trading using opposite Eastern Communications and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications 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.Eastern Communications vs. Yindu Kitchen Equipment | Eastern Communications vs. Songz Automobile Air | Eastern Communications vs. Changchun Faway Automobile | Eastern Communications vs. Dongfeng Automobile Co |
China Merchants vs. PetroChina Co Ltd | China Merchants vs. China Mobile Limited | China Merchants vs. CNOOC Limited | China Merchants vs. Ping An Insurance |
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.
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