Correlation Between Archrock and China Resources
Can any of the company-specific risk be diversified away by investing in both Archrock 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 Archrock and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and China Resources Power, you can compare the effects of market volatilities on Archrock 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 Archrock with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and China Resources.
Diversification Opportunities for Archrock and China Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Archrock and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Archrock 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 Archrock 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 Power has no effect on the direction of Archrock i.e., Archrock and China Resources go up and down completely randomly.
Pair Corralation between Archrock and China Resources
Given the investment horizon of 90 days Archrock is expected to generate 0.54 times more return on investment than China Resources. However, Archrock is 1.86 times less risky than China Resources. It trades about 0.12 of its potential returns per unit of risk. China Resources Power is currently generating about 0.04 per unit of risk. If you would invest 1,429 in Archrock on September 4, 2024 and sell it today you would earn a total of 1,163 from holding Archrock or generate 81.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Archrock vs. China Resources Power
Performance |
| Timeline |
| Archrock |
| China Resources Power |
Archrock and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archrock and China Resources
The main advantage of trading using opposite Archrock and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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.| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific Holdings |
| China Resources vs. BJs Restaurants | China Resources vs. Commonwealth Bank of | China Resources vs. Arrow Financial | China Resources vs. Barings BDC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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