Correlation Between China Resources and BUDWEISER BREWUNSPADR/4
Can any of the company-specific risk be diversified away by investing in both China Resources and BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4, you can compare the effects of market volatilities on China Resources and BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BUDWEISER BREWUNSPADR/4.
Diversification Opportunities for China Resources and BUDWEISER BREWUNSPADR/4
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and BUDWEISER is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and BUDWEISER BREWUNSPADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUDWEISER BREWUNSPADR/4 has no effect on the direction of China Resources i.e., China Resources and BUDWEISER BREWUNSPADR/4 go up and down completely randomly.
Pair Corralation between China Resources and BUDWEISER BREWUNSPADR/4
Assuming the 90 days horizon China Resources Beer is expected to generate 0.7 times more return on investment than BUDWEISER BREWUNSPADR/4. However, China Resources Beer is 1.43 times less risky than BUDWEISER BREWUNSPADR/4. It trades about 0.01 of its potential returns per unit of risk. BUDWEISER BREWUNSPADR4 is currently generating about -0.01 per unit of risk. If you would invest 324.00 in China Resources Beer on September 24, 2024 and sell it today you would lose (12.00) from holding China Resources Beer or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. BUDWEISER BREWUNSPADR4
Performance |
| Timeline |
| China Resources Beer |
| BUDWEISER BREWUNSPADR/4 |
China Resources and BUDWEISER BREWUNSPADR/4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BUDWEISER BREWUNSPADR/4
The main advantage of trading using opposite China Resources and BUDWEISER BREWUNSPADR/4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 will offset losses from the drop in BUDWEISER BREWUNSPADR/4's long position.| China Resources vs. Fomento Econmico Mexicano | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. BUDWEISER BREWUNSPADR4 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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