Correlation Between China Resources and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both China Resources and HYDROFARM HLD 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 HYDROFARM HLD 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 HYDROFARM HLD GRP, you can compare the effects of market volatilities on China Resources and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and HYDROFARM HLD.
Diversification Opportunities for China Resources and HYDROFARM HLD
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and HYDROFARM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD 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 HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of China Resources i.e., China Resources and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between China Resources and HYDROFARM HLD
Assuming the 90 days horizon China Resources Beer is expected to under-perform the HYDROFARM HLD. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.79 times less risky than HYDROFARM HLD. The stock trades about -0.17 of its potential returns per unit of risk. The HYDROFARM HLD GRP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 61.00 in HYDROFARM HLD GRP on August 29, 2024 and sell it today you would lose (1.00) from holding HYDROFARM HLD GRP or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| China Resources Beer |
| HYDROFARM HLD GRP |
China Resources and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and HYDROFARM HLD
The main advantage of trading using opposite China Resources and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| China Resources vs. Diamyd Medical AB | China Resources vs. Monster Beverage Corp | China Resources vs. Dairy Farm International | China Resources vs. INDOFOOD AGRI RES |
| HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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