Correlation Between Arrow Financial and China Resources
Can any of the company-specific risk be diversified away by investing in both Arrow Financial 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 Arrow Financial and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Financial and China Resources Power, you can compare the effects of market volatilities on Arrow Financial 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 Arrow Financial with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and China Resources.
Diversification Opportunities for Arrow Financial and China Resources
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arrow and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial 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 Arrow Financial 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 Arrow Financial 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 Arrow Financial i.e., Arrow Financial and China Resources go up and down completely randomly.
Pair Corralation between Arrow Financial and China Resources
Given the investment horizon of 90 days Arrow Financial is expected to generate 3.29 times more return on investment than China Resources. However, Arrow Financial is 3.29 times more volatile than China Resources Power. It trades about 0.1 of its potential returns per unit of risk. China Resources Power is currently generating about -0.13 per unit of risk. If you would invest 2,789 in Arrow Financial on September 12, 2024 and sell it today you would earn a total of 407.00 from holding Arrow Financial or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Arrow Financial vs. China Resources Power
Performance |
| Timeline |
| Arrow Financial |
| China Resources Power |
Arrow Financial and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and China Resources
The main advantage of trading using opposite Arrow Financial and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial 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.| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
| China Resources vs. NRG Energy | China Resources vs. TransAlta Corp | China Resources vs. Kenon Holdings | China Resources vs. Pampa Energia SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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