Correlation Between China Resources and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both China Resources and BOSTON BEER 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 BOSTON BEER 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 BOSTON BEER A , you can compare the effects of market volatilities on China Resources and BOSTON BEER 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 BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BOSTON BEER.
Diversification Opportunities for China Resources and BOSTON BEER
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and BOSTON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of China Resources i.e., China Resources and BOSTON BEER go up and down completely randomly.
Pair Corralation between China Resources and BOSTON BEER
Assuming the 90 days horizon China Resources Beer is expected to generate 1.42 times more return on investment than BOSTON BEER. However, China Resources is 1.42 times more volatile than BOSTON BEER A . It trades about -0.05 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.54 per unit of risk. If you would invest 306.00 in China Resources Beer on October 25, 2024 and sell it today you would lose (8.00) from holding China Resources Beer or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. BOSTON BEER A
Performance |
| Timeline |
| China Resources Beer |
| BOSTON BEER A |
China Resources and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BOSTON BEER
The main advantage of trading using opposite China Resources and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BOSTON BEER 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 BOSTON BEER will offset losses from the drop in BOSTON BEER's long position.| China Resources vs. Verizon Communications | China Resources vs. National Beverage Corp | China Resources vs. GEELY AUTOMOBILE | China Resources vs. Singapore Telecommunications Limited |
| BOSTON BEER vs. Aegean Airlines SA | BOSTON BEER vs. SINGAPORE AIRLINES | BOSTON BEER vs. AEGEAN AIRLINES | BOSTON BEER vs. United Airlines 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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