Correlation Between China Resources and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both China Resources and BE Semiconductor 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 BE Semiconductor 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 BE Semiconductor Industries, you can compare the effects of market volatilities on China Resources and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BE Semiconductor.
Diversification Opportunities for China Resources and BE Semiconductor
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and BSI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of China Resources i.e., China Resources and BE Semiconductor go up and down completely randomly.
Pair Corralation between China Resources and BE Semiconductor
Assuming the 90 days horizon China Resources Beer is expected to under-perform the BE Semiconductor. In addition to that, China Resources is 1.54 times more volatile than BE Semiconductor Industries. It trades about -0.09 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.23 per unit of volatility. If you would invest 9,756 in BE Semiconductor Industries on September 1, 2024 and sell it today you would earn a total of 1,254 from holding BE Semiconductor Industries or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. BE Semiconductor Industries
Performance |
| Timeline |
| China Resources Beer |
| BE Semiconductor Ind |
China Resources and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BE Semiconductor
The main advantage of trading using opposite China Resources and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. Origin Agritech |
| BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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