Correlation Between BRIT AMER and China Resources
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and China Resources Beer, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and China Resources.
Diversification Opportunities for BRIT AMER and China Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BRIT and China is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO 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 BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and China Resources go up and down completely randomly.
Pair Corralation between BRIT AMER and China Resources
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.37 times more return on investment than China Resources. However, BRIT AMER TOBACCO is 2.68 times less risky than China Resources. It trades about 0.02 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 3,322 in BRIT AMER TOBACCO on September 4, 2024 and sell it today you would earn a total of 288.00 from holding BRIT AMER TOBACCO or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. China Resources Beer
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| China Resources Beer |
BRIT AMER and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and China Resources
The main advantage of trading using opposite BRIT AMER and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. Thai Beverage Public | BRIT AMER vs. ITALIAN WINE BRANDS | BRIT AMER vs. VIVA WINE GROUP | BRIT AMER vs. National Retail Properties |
| China Resources vs. HF SINCLAIR P | China Resources vs. PKSHA TECHNOLOGY INC | China Resources vs. WIZZ AIR HLDGUNSPADR4 | China Resources vs. Alaska Air Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |