Correlation Between China Merchants and COSCO SHIPPING

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

China Merchants Port  vs.  COSCO SHIPPING Ports

 Performance 
       Timeline  
China Merchants Port 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Port are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Merchants reported solid returns over the last few months and may actually be approaching a breakup point.
COSCO SHIPPING Ports 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Ports are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind China Merchants Port and COSCO SHIPPING Ports 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules