Correlation Between ASSOC BR and China Resources
Can any of the company-specific risk be diversified away by investing in both ASSOC BR 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 ASSOC BR and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSOC BR FOODS and China Resources Beer, you can compare the effects of market volatilities on ASSOC BR 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 ASSOC BR with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and China Resources.
Diversification Opportunities for ASSOC BR and China Resources
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASSOC and China is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS 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 ASSOC BR 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 ASSOC BR FOODS 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 ASSOC BR i.e., ASSOC BR and China Resources go up and down completely randomly.
Pair Corralation between ASSOC BR and China Resources
Assuming the 90 days trading horizon ASSOC BR FOODS is expected to generate 0.48 times more return on investment than China Resources. However, ASSOC BR FOODS is 2.09 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 -0.01 per unit of risk. If you would invest 1,625 in ASSOC BR FOODS on September 20, 2024 and sell it today you would earn a total of 875.00 from holding ASSOC BR FOODS or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSOC BR FOODS vs. China Resources Beer
Performance |
| Timeline |
| ASSOC BR FOODS |
| China Resources Beer |
ASSOC BR and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSOC BR and China Resources
The main advantage of trading using opposite ASSOC BR and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR 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.| ASSOC BR vs. Superior Plus Corp | ASSOC BR vs. SIVERS SEMICONDUCTORS AB | ASSOC BR vs. NorAm Drilling AS | ASSOC BR vs. Norsk Hydro ASA |
| China Resources vs. Ribbon Communications | China Resources vs. SUN ART RETAIL | China Resources vs. SK TELECOM TDADR | China Resources vs. SIDETRADE EO 1 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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