Correlation Between Barfresh Food and China Resources
Can any of the company-specific risk be diversified away by investing in both Barfresh Food 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 Barfresh Food and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barfresh Food Group and China Resources Beer, you can compare the effects of market volatilities on Barfresh Food 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 Barfresh Food with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barfresh Food and China Resources.
Diversification Opportunities for Barfresh Food and China Resources
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barfresh and China is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barfresh Food Group 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 Barfresh Food 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 Barfresh Food Group 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 Barfresh Food i.e., Barfresh Food and China Resources go up and down completely randomly.
Pair Corralation between Barfresh Food and China Resources
Given the investment horizon of 90 days Barfresh Food Group is expected to generate 2.86 times more return on investment than China Resources. However, Barfresh Food is 2.86 times more volatile than China Resources Beer. It trades about 0.06 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.04 per unit of risk. If you would invest 110.00 in Barfresh Food Group on August 24, 2024 and sell it today you would earn a total of 175.00 from holding Barfresh Food Group or generate 159.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Barfresh Food Group vs. China Resources Beer
Performance |
| Timeline |
| Barfresh Food Group |
| China Resources Beer |
Barfresh Food and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barfresh Food and China Resources
The main advantage of trading using opposite Barfresh Food and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barfresh Food 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.| Barfresh Food vs. Flow Beverage Corp | Barfresh Food vs. Fbec Worldwide | Barfresh Food vs. Hill Street Beverage | Barfresh Food vs. Eq Energy Drink |
| China Resources vs. Barfresh Food Group | China Resources vs. Fbec Worldwide | China Resources vs. Flow Beverage Corp | China Resources vs. Eq Energy Drink |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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