Correlation Between G8 EDUCATION and China Resources
Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION 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 G8 EDUCATION and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 EDUCATION and China Resources Land, you can compare the effects of market volatilities on G8 EDUCATION 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 G8 EDUCATION with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and China Resources.
Diversification Opportunities for G8 EDUCATION and China Resources
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3EAG and China is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and G8 EDUCATION 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 G8 EDUCATION 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 Land has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and China Resources go up and down completely randomly.
Pair Corralation between G8 EDUCATION and China Resources
Assuming the 90 days trading horizon G8 EDUCATION is expected to under-perform the China Resources. In addition to that, G8 EDUCATION is 1.02 times more volatile than China Resources Land. It trades about -0.36 of its total potential returns per unit of risk. China Resources Land is currently generating about -0.34 per unit of volatility. If you would invest 290.00 in China Resources Land on October 13, 2024 and sell it today you would lose (26.00) from holding China Resources Land or give up 8.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 EDUCATION vs. China Resources Land
Performance |
| Timeline |
| G8 EDUCATION |
| China Resources Land |
G8 EDUCATION and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 EDUCATION and China Resources
The main advantage of trading using opposite G8 EDUCATION and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION 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.| G8 EDUCATION vs. Delta Electronics Public | G8 EDUCATION vs. Webster Financial | G8 EDUCATION vs. ELECTRONIC ARTS | G8 EDUCATION vs. Samsung Electronics Co |
| China Resources vs. STRAYER EDUCATION | China Resources vs. G8 EDUCATION | China Resources vs. United Insurance Holdings | China Resources vs. Insurance Australia Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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