Correlation Between China Resources and Royal Unibrew
Can any of the company-specific risk be diversified away by investing in both China Resources and Royal Unibrew 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 Royal Unibrew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Royal Unibrew AS, you can compare the effects of market volatilities on China Resources and Royal Unibrew 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 Royal Unibrew. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Royal Unibrew.
Diversification Opportunities for China Resources and Royal Unibrew
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Royal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Royal Unibrew AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Unibrew AS 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 Beer are associated (or correlated) with Royal Unibrew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Unibrew AS has no effect on the direction of China Resources i.e., China Resources and Royal Unibrew go up and down completely randomly.
Pair Corralation between China Resources and Royal Unibrew
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Royal Unibrew. In addition to that, China Resources is 2.91 times more volatile than Royal Unibrew AS. It trades about -0.1 of its total potential returns per unit of risk. Royal Unibrew AS is currently generating about -0.19 per unit of volatility. If you would invest 7,195 in Royal Unibrew AS on August 24, 2024 and sell it today you would lose (415.00) from holding Royal Unibrew AS or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Resources Beer vs. Royal Unibrew AS
Performance |
| Timeline |
| China Resources Beer |
| Royal Unibrew AS |
China Resources and Royal Unibrew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Royal Unibrew
The main advantage of trading using opposite China Resources and Royal Unibrew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Royal Unibrew 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 Royal Unibrew will offset losses from the drop in Royal Unibrew's long position.| China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Royal Unibrew AS |
| Royal Unibrew vs. UNIVERSAL MUSIC GROUP | Royal Unibrew vs. GRIFFIN MINING LTD | Royal Unibrew vs. Western Copper and | Royal Unibrew vs. Evolution Mining Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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