Correlation Between ALEFARM BREWING and China Resources
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING 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 ALEFARM BREWING and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and China Resources Beer, you can compare the effects of market volatilities on ALEFARM BREWING 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 ALEFARM BREWING with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and China Resources.
Diversification Opportunities for ALEFARM BREWING and China Resources
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ALEFARM and China is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 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 ALEFARM BREWING 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 ALEFARM BREWING DK 05 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 ALEFARM BREWING i.e., ALEFARM BREWING and China Resources go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and China Resources
Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to generate 1.53 times more return on investment than China Resources. However, ALEFARM BREWING is 1.53 times more volatile than China Resources Beer. It trades about 0.11 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.09 per unit of risk. If you would invest 16.00 in ALEFARM BREWING DK 05 on October 24, 2024 and sell it today you would earn a total of 1.00 from holding ALEFARM BREWING DK 05 or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. China Resources Beer
Performance |
| Timeline |
| ALEFARM BREWING DK |
| China Resources Beer |
ALEFARM BREWING and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and China Resources
The main advantage of trading using opposite ALEFARM BREWING and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING 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.| ALEFARM BREWING vs. AIR PRODCHEMICALS | ALEFARM BREWING vs. Arrow Electronics | ALEFARM BREWING vs. LPKF Laser Electronics | ALEFARM BREWING vs. Commercial Vehicle Group |
| China Resources vs. THAI BEVERAGE | China Resources vs. Ebro Foods SA | China Resources vs. Japan Asia Investment | China Resources vs. ECHO INVESTMENT ZY |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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