Correlation Between Royal Unibrew and China Resources
Can any of the company-specific risk be diversified away by investing in both Royal Unibrew and China Resources 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 Royal Unibrew and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Unibrew AS and China Resources Beer, you can compare the effects of market volatilities on Royal Unibrew and China Resources 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 Royal Unibrew with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Unibrew and China Resources.
Diversification Opportunities for Royal Unibrew and China Resources
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royal and China is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Royal Unibrew AS and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Royal Unibrew 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 Royal Unibrew AS are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Royal Unibrew i.e., Royal Unibrew and China Resources go up and down completely randomly.
Pair Corralation between Royal Unibrew and China Resources
Assuming the 90 days horizon Royal Unibrew AS is expected to generate 0.74 times more return on investment than China Resources. However, Royal Unibrew AS is 1.35 times less risky than China Resources. It trades about 0.04 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.02 per unit of risk. If you would invest 5,308 in Royal Unibrew AS on August 24, 2024 and sell it today you would earn a total of 1,472 from holding Royal Unibrew AS or generate 27.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Unibrew AS vs. China Resources Beer
Performance |
| Timeline |
| Royal Unibrew AS |
| China Resources Beer |
Royal Unibrew and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Unibrew and China Resources
The main advantage of trading using opposite Royal Unibrew and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Unibrew position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| Royal Unibrew vs. UNIVERSAL MUSIC GROUP | Royal Unibrew vs. GRIFFIN MINING LTD | Royal Unibrew vs. Western Copper and | Royal Unibrew vs. Evolution Mining Limited |
| China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Royal Unibrew AS |
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.
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