Correlation Between Western Metal and China Merchants
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By analyzing existing cross correlation between Western Metal Materials and China Merchants Bank, you can compare the effects of market volatilities on Western Metal 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 Western Metal with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and China Merchants.
Diversification Opportunities for Western Metal and China Merchants
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and China is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials 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 Western Metal 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 Western Metal Materials 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 Western Metal i.e., Western Metal and China Merchants go up and down completely randomly.
Pair Corralation between Western Metal and China Merchants
Assuming the 90 days trading horizon Western Metal is expected to generate 1.08 times less return on investment than China Merchants. In addition to that, Western Metal is 1.66 times more volatile than China Merchants Bank. It trades about 0.01 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.02 per unit of volatility. If you would invest 3,459 in China Merchants Bank on September 12, 2024 and sell it today you would earn a total of 401.00 from holding China Merchants Bank or generate 11.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Western Metal Materials vs. China Merchants Bank
Performance |
Timeline |
Western Metal Materials |
China Merchants Bank |
Western Metal and China Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Metal and China Merchants
The main advantage of trading using opposite Western Metal and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Metal 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.Western Metal vs. Zijin Mining Group | Western Metal vs. Wanhua Chemical Group | Western Metal vs. Baoshan Iron Steel | Western Metal vs. Rongsheng Petrochemical Co |
China Merchants vs. Qilu Bank Co | China Merchants vs. Postal Savings Bank | China Merchants vs. Bank of Suzhou | China Merchants vs. Western Metal Materials |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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