Correlation Between CHINA CONBANK and China Resources
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK 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 CHINA CONBANK and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA BANK ADR20 and China Resources Beer, you can compare the effects of market volatilities on CHINA CONBANK 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 CHINA CONBANK with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and China Resources.
Diversification Opportunities for CHINA CONBANK and China Resources
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and China is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 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 CHINA CONBANK 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 CHINA BANK ADR20 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 CHINA CONBANK i.e., CHINA CONBANK and China Resources go up and down completely randomly.
Pair Corralation between CHINA CONBANK and China Resources
Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 0.67 times more return on investment than China Resources. However, CHINA BANK ADR20 is 1.49 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 912.00 in CHINA BANK ADR20 on September 14, 2024 and sell it today you would earn a total of 568.00 from holding CHINA BANK ADR20 or generate 62.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. China Resources Beer
Performance |
| Timeline |
| CHINA BANK ADR20 |
| China Resources Beer |
CHINA CONBANK and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and China Resources
The main advantage of trading using opposite CHINA CONBANK and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK 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.| CHINA CONBANK vs. AGRICULTBK HADR25 YC | CHINA CONBANK vs. The Toronto Dominion Bank | CHINA CONBANK vs. Superior Plus Corp | CHINA CONBANK vs. SIVERS SEMICONDUCTORS AB |
| China Resources vs. PLAYMATES TOYS | China Resources vs. InPlay Oil Corp | China Resources vs. Playtech plc | China Resources vs. Universal Display |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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