Correlation Between Apollo Investment and China Resources
Can any of the company-specific risk be diversified away by investing in both Apollo Investment 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 Apollo Investment and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment Corp and China Resources Beer, you can compare the effects of market volatilities on Apollo Investment 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 Apollo Investment with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and China Resources.
Diversification Opportunities for Apollo Investment and China Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apollo and China is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp 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 Apollo Investment 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 Apollo Investment Corp 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 Apollo Investment i.e., Apollo Investment and China Resources go up and down completely randomly.
Pair Corralation between Apollo Investment and China Resources
Assuming the 90 days trading horizon Apollo Investment is expected to generate 2.43 times less return on investment than China Resources. But when comparing it to its historical volatility, Apollo Investment Corp is 3.14 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Beer is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 257.00 in China Resources Beer on August 28, 2024 and sell it today you would earn a total of 55.00 from holding China Resources Beer or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Apollo Investment Corp vs. China Resources Beer
Performance |
| Timeline |
| Apollo Investment Corp |
| China Resources Beer |
Apollo Investment and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and China Resources
The main advantage of trading using opposite Apollo Investment and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment 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.| Apollo Investment vs. Macquarie Group Limited | Apollo Investment vs. MSCI Inc | Apollo Investment vs. Superior Plus Corp | Apollo Investment vs. NMI Holdings |
| China Resources vs. Diamyd Medical AB | China Resources vs. Monster Beverage Corp | China Resources vs. Dairy Farm International | China Resources vs. INDOFOOD AGRI RES |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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