Correlation Between China Resources and BROOKFBH 462
Can any of the company-specific risk be diversified away by investing in both China Resources and BROOKFBH 462 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 BROOKFBH 462 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 BROOKFBH 462 PRSNU, you can compare the effects of market volatilities on China Resources and BROOKFBH 462 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 BROOKFBH 462. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BROOKFBH 462.
Diversification Opportunities for China Resources and BROOKFBH 462
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and BROOKFBH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and BROOKFBH 462 PRSNU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFBH 462 PRSNU 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 BROOKFBH 462. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFBH 462 PRSNU has no effect on the direction of China Resources i.e., China Resources and BROOKFBH 462 go up and down completely randomly.
Pair Corralation between China Resources and BROOKFBH 462
Assuming the 90 days horizon China Resources Beer is expected to under-perform the BROOKFBH 462. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.04 times less risky than BROOKFBH 462. The stock trades about -0.17 of its potential returns per unit of risk. The BROOKFBH 462 PRSNU is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,544 in BROOKFBH 462 PRSNU on August 29, 2024 and sell it today you would earn a total of 13.00 from holding BROOKFBH 462 PRSNU or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
China Resources Beer vs. BROOKFBH 462 PRSNU
Performance |
| Timeline |
| China Resources Beer |
| BROOKFBH 462 PRSNU |
China Resources and BROOKFBH 462 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BROOKFBH 462
The main advantage of trading using opposite China Resources and BROOKFBH 462 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BROOKFBH 462 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 BROOKFBH 462 will offset losses from the drop in BROOKFBH 462'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 |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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