Correlation Between China Resources and Fletcher Building
Can any of the company-specific risk be diversified away by investing in both China Resources and Fletcher Building 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 Resources and Fletcher Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Cement and Fletcher Building Ltd, you can compare the effects of market volatilities on China Resources and Fletcher Building 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 Resources with a short position of Fletcher Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Fletcher Building.
Diversification Opportunities for China Resources and Fletcher Building
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Fletcher is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Cement and Fletcher Building Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fletcher Building and China Resources 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 Resources Cement are associated (or correlated) with Fletcher Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fletcher Building has no effect on the direction of China Resources i.e., China Resources and Fletcher Building go up and down completely randomly.
Pair Corralation between China Resources and Fletcher Building
Assuming the 90 days horizon China Resources Cement is expected to generate 1.14 times more return on investment than Fletcher Building. However, China Resources is 1.14 times more volatile than Fletcher Building Ltd. It trades about -0.04 of its potential returns per unit of risk. Fletcher Building Ltd is currently generating about -0.2 per unit of risk. If you would invest 735.00 in China Resources Cement on September 14, 2024 and sell it today you would lose (31.00) from holding China Resources Cement or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Cement vs. Fletcher Building Ltd
Performance |
| Timeline |
| China Resources Cement |
| Fletcher Building |
China Resources and Fletcher Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Fletcher Building
The main advantage of trading using opposite China Resources and Fletcher Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Fletcher Building 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 Fletcher Building will offset losses from the drop in Fletcher Building's long position.| China Resources vs. CRH PLC ADR | China Resources vs. Holcim | China Resources vs. Lafargeholcim Ltd ADR | China Resources vs. Vulcan Materials |
| Fletcher Building vs. Cementos Pacasmayo SAA | Fletcher Building vs. Summit Materials | Fletcher Building vs. Eagle Materials | Fletcher Building vs. CRH PLC ADR |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |