The Correlation Of China's Shanghai Stock Market With Other Main Indexes

Recently, China's Shanghai stock market experienced a huge jump, shortly after that, the American, European, and Hong Kong stock market also fell at different levels. This led to people's dispute over the correlation of stock market again.In this paper, we select 31main stock indexes in the world, using the monthly-adjusted close price from Jan 2000 to Mar 2007, to do the empirical research with our Shanghai stock index. From that, we get the conclusion that it has some weak correlation with other indexes. After that, we do further research with the 12 indexes, which have relatively high correlation, in order to compare the correlation between Shanghai stock index and other indexes, and that between other indexes. The result shows that Shanghai stock index has a relatively low correlation. Then, we separate the figures into two groups by Aug 2003, and do correlation research respectfully, trying to shows whether the correlation has increased during 3 years time. Finally we get the negative result.After the empirical research, we get on to the theoretical analysis to find the reasons under the research result. And we discuss the meaning of the research to us from the aspects of investors and the healthy development of our stock market.