Correlation Between China Resources and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both China Resources and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING, you can compare the effects of market volatilities on China Resources and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and AOYAMA TRADING.
Diversification Opportunities for China Resources and AOYAMA TRADING
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and AOYAMA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of China Resources i.e., China Resources and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between China Resources and AOYAMA TRADING
Assuming the 90 days horizon China Resources Beer is expected to under-perform the AOYAMA TRADING. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.48 times less risky than AOYAMA TRADING. The stock trades about -0.02 of its potential returns per unit of risk. The AOYAMA TRADING is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 325.00 in AOYAMA TRADING on October 27, 2024 and sell it today you would earn a total of 995.00 from holding AOYAMA TRADING or generate 306.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. AOYAMA TRADING
Performance |
| Timeline |
| China Resources Beer |
| AOYAMA TRADING |
China Resources and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and AOYAMA TRADING
The main advantage of trading using opposite China Resources and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| China Resources vs. Fomento Econmico Mexicano | China Resources vs. BUDWEISER BREWUNSPADR4 | China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE |
| AOYAMA TRADING vs. InPlay Oil Corp | AOYAMA TRADING vs. Singapore Reinsurance | AOYAMA TRADING vs. ANTA SPORTS PRODUCT | AOYAMA TRADING vs. United Insurance Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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