Correlation Between China Merchants and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both China Merchants and COSCO SHIPPING 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 COSCO SHIPPING 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 COSCO SHIPPING Ports, you can compare the effects of market volatilities on China Merchants and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and COSCO SHIPPING.
Diversification Opportunities for China Merchants and COSCO SHIPPING
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and COSCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Port and COSCO SHIPPING Ports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Ports 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Ports has no effect on the direction of China Merchants i.e., China Merchants and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between China Merchants and COSCO SHIPPING
Assuming the 90 days horizon China Merchants is expected to generate 1.19 times less return on investment than COSCO SHIPPING. In addition to that, China Merchants is 1.02 times more volatile than COSCO SHIPPING Ports. It trades about 0.17 of its total potential returns per unit of risk. COSCO SHIPPING Ports is currently generating about 0.2 per unit of volatility. If you would invest 46.00 in COSCO SHIPPING Ports on April 23, 2025 and sell it today you would earn a total of 13.00 from holding COSCO SHIPPING Ports or generate 28.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.44% |
Values | Daily Returns |
China Merchants Port vs. COSCO SHIPPING Ports
Performance |
Timeline |
China Merchants Port |
COSCO SHIPPING Ports |
China Merchants and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Merchants and COSCO SHIPPING
The main advantage of trading using opposite China Merchants and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.China Merchants vs. COSCO SHIPPING Holdings | China Merchants vs. Nippon Yusen Kabushiki | China Merchants vs. Hapag Lloyd AG | China Merchants vs. Mitsui OSK Lines |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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