Correlation Between China Resources and Goosehead Insurance
Can any of the company-specific risk be diversified away by investing in both China Resources and Goosehead Insurance 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 Goosehead Insurance 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 Goosehead Insurance, you can compare the effects of market volatilities on China Resources and Goosehead Insurance 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 Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Goosehead Insurance.
Diversification Opportunities for China Resources and Goosehead Insurance
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Goosehead is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance 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 Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of China Resources i.e., China Resources and Goosehead Insurance go up and down completely randomly.
Pair Corralation between China Resources and Goosehead Insurance
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Goosehead Insurance. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.04 times less risky than Goosehead Insurance. The stock trades about -0.1 of its potential returns per unit of risk. The Goosehead Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,384 in Goosehead Insurance on October 30, 2024 and sell it today you would earn a total of 310.00 from holding Goosehead Insurance or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Goosehead Insurance
Performance |
| Timeline |
| China Resources Beer |
| Goosehead Insurance |
China Resources and Goosehead Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Goosehead Insurance
The main advantage of trading using opposite China Resources and Goosehead Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Goosehead Insurance 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 Goosehead Insurance will offset losses from the drop in Goosehead Insurance's long position.| China Resources vs. American Public Education | China Resources vs. STRAYER EDUCATION | China Resources vs. EMBARK EDUCATION LTD | China Resources vs. DEVRY EDUCATION GRP |
| Goosehead Insurance vs. TITANIUM TRANSPORTGROUP | Goosehead Insurance vs. SCIENCE IN SPORT | Goosehead Insurance vs. DICKS Sporting Goods | Goosehead Insurance vs. BII Railway Transportation |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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