Correlation Between China Resources and BUDWEISER BREWUNSPADR4
Can any of the company-specific risk be diversified away by investing in both China Resources and BUDWEISER BREWUNSPADR4 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 BREWUNSPADR4 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 BREWUNSPADR4 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 BREWUNSPADR4. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BUDWEISER BREWUNSPADR4.
Diversification Opportunities for China Resources and BUDWEISER BREWUNSPADR4
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and BUDWEISER is 0.83. 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 BREWUNSPADR4 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 BREWUNSPADR4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUDWEISER BREWUNSPADR4 has no effect on the direction of China Resources i.e., China Resources and BUDWEISER BREWUNSPADR4 go up and down completely randomly.
Pair Corralation between China Resources and BUDWEISER BREWUNSPADR4
Assuming the 90 days horizon China Resources Beer is expected to generate 0.74 times more return on investment than BUDWEISER BREWUNSPADR4. However, China Resources Beer is 1.36 times less risky than BUDWEISER BREWUNSPADR4. It trades about -0.02 of its potential returns per unit of risk. BUDWEISER BREWUNSPADR4 is currently generating about -0.04 per unit of risk. If you would invest 467.00 in China Resources Beer on October 28, 2024 and sell it today you would lose (183.00) from holding China Resources Beer or give up 39.19% 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 BREWUNSPADR4 |
China Resources and BUDWEISER BREWUNSPADR4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BUDWEISER BREWUNSPADR4
The main advantage of trading using opposite China Resources and BUDWEISER BREWUNSPADR4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BUDWEISER BREWUNSPADR4 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 BREWUNSPADR4 will offset losses from the drop in BUDWEISER BREWUNSPADR4's long position.| China Resources vs. STORE ELECTRONIC | China Resources vs. Samsung Electronics Co | China Resources vs. Richardson Electronics | China Resources vs. STMICROELECTRONICS |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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