Correlation Between China Merchants and SITC International

Can any of the company-specific risk be diversified away by investing in both China Merchants and SITC International 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 SITC International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Merchants Port and SITC International Holdings, you can compare the effects of market volatilities on China Merchants and SITC International 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 SITC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and SITC International.

Diversification Opportunities for China Merchants and SITC International

0.18

Correlation Coefficient

China Merchants  SITC International

Average diversification

The 3 months correlation between China and SITC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Port and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 Port are associated (or correlated) with SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of China Merchants i.e., China Merchants and SITC International go up and down completely randomly.

Pair Corralation between China Merchants and SITC International

If you would invest  162.00  in China Merchants Port on October 5, 2024 and sell it today you would earn a total of  0.00  from holding China Merchants Port or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Merchants Port  vs.  SITC International Holdings

China Merchants Port

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Port are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, China Merchants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SITC International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, SITC International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Merchants and SITC International

The main advantage of trading using opposite China Merchants and SITC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, SITC International 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 SITC International will offset losses from the drop in SITC International's long position.

The idea behind China Merchants Port and SITC International Holdings 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.