Correlation Between CREO MEDICAL and China Resources
Can any of the company-specific risk be diversified away by investing in both CREO MEDICAL 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 CREO MEDICAL and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CREO MEDICAL GRP and China Resources Beer, you can compare the effects of market volatilities on CREO MEDICAL 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 CREO MEDICAL with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and China Resources.
Diversification Opportunities for CREO MEDICAL and China Resources
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CREO and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CREO MEDICAL GRP 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 CREO MEDICAL 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 CREO MEDICAL GRP 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 CREO MEDICAL i.e., CREO MEDICAL and China Resources go up and down completely randomly.
Pair Corralation between CREO MEDICAL and China Resources
Assuming the 90 days horizon CREO MEDICAL GRP is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, CREO MEDICAL GRP is 1.02 times less risky than China Resources. The stock trades about -0.05 of its potential returns per unit of risk. The China Resources Beer is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 271.00 in China Resources Beer on October 17, 2024 and sell it today you would earn a total of 13.00 from holding China Resources Beer or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CREO MEDICAL GRP vs. China Resources Beer
Performance |
| Timeline |
| CREO MEDICAL GRP |
| China Resources Beer |
CREO MEDICAL and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CREO MEDICAL and China Resources
The main advantage of trading using opposite CREO MEDICAL and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREO MEDICAL 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.| CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc |
| China Resources vs. Renesas Electronics | China Resources vs. National Beverage Corp | China Resources vs. STMicroelectronics NV | China Resources vs. Nucletron Electronic Aktiengesellschaft |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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