Correlation Between China Resources and CHINA BANK
Can any of the company-specific risk be diversified away by investing in both China Resources and CHINA BANK 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 CHINA BANK 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 CHINA BANK ADR20, you can compare the effects of market volatilities on China Resources and CHINA BANK 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 CHINA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CHINA BANK.
Diversification Opportunities for China Resources and CHINA BANK
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and CHINA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 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 CHINA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of China Resources i.e., China Resources and CHINA BANK go up and down completely randomly.
Pair Corralation between China Resources and CHINA BANK
Assuming the 90 days horizon China Resources Beer is expected to under-perform the CHINA BANK. In addition to that, China Resources is 1.16 times more volatile than CHINA BANK ADR20. It trades about -0.12 of its total potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.02 per unit of volatility. If you would invest 1,444 in CHINA BANK ADR20 on October 20, 2024 and sell it today you would earn a total of 6.00 from holding CHINA BANK ADR20 or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. CHINA BANK ADR20
Performance |
| Timeline |
| China Resources Beer |
| CHINA BANK ADR20 |
China Resources and CHINA BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CHINA BANK
The main advantage of trading using opposite China Resources and CHINA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CHINA BANK 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 CHINA BANK will offset losses from the drop in CHINA BANK's long position.| China Resources vs. Diamyd Medical AB | China Resources vs. Liberty Broadband | China Resources vs. CITY OFFICE REIT | China Resources vs. Singapore Telecommunications Limited |
| CHINA BANK vs. INDCOMMBK CHINA ADR20 | CHINA BANK vs. Industrial and Commercial | CHINA BANK vs. AGRICULTBK HADR25 YC | CHINA BANK vs. BANK OCHINA H |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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