Correlation Between China Resources and CREO MEDICAL
Can any of the company-specific risk be diversified away by investing in both China Resources and CREO MEDICAL 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 CREO MEDICAL 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 CREO MEDICAL GRP, you can compare the effects of market volatilities on China Resources and CREO MEDICAL 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 CREO MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CREO MEDICAL.
Diversification Opportunities for China Resources and CREO MEDICAL
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and CREO is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CREO MEDICAL GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREO MEDICAL GRP 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 CREO MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREO MEDICAL GRP has no effect on the direction of China Resources i.e., China Resources and CREO MEDICAL go up and down completely randomly.
Pair Corralation between China Resources and CREO MEDICAL
Assuming the 90 days horizon China Resources Beer is expected to generate 1.02 times more return on investment than CREO MEDICAL. However, China Resources is 1.02 times more volatile than CREO MEDICAL GRP. It trades about 0.02 of its potential returns per unit of risk. CREO MEDICAL GRP is currently generating about -0.05 per unit of risk. If you would invest 271.00 in China Resources Beer on October 17, 2024 and sell it today you would earn a total of 13.00 from holding China Resources Beer or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. CREO MEDICAL GRP
Performance |
| Timeline |
| China Resources Beer |
| CREO MEDICAL GRP |
China Resources and CREO MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CREO MEDICAL
The main advantage of trading using opposite China Resources and CREO MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CREO MEDICAL 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 CREO MEDICAL will offset losses from the drop in CREO MEDICAL's long position.| China Resources vs. Automatic Data Processing | China Resources vs. Molina Healthcare | China Resources vs. US Physical Therapy | China Resources vs. SILVER BULLET DATA |
| CREO MEDICAL vs. Fair Isaac Corp | CREO MEDICAL vs. Corsair Gaming | CREO MEDICAL vs. Direct Line Insurance | CREO MEDICAL vs. The Hanover Insurance |
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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