Correlation Between China Resources and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both China Resources and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on China Resources and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CDN IMPERIAL.
Diversification Opportunities for China Resources and CDN IMPERIAL
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and CDN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of China Resources i.e., China Resources and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between China Resources and CDN IMPERIAL
Assuming the 90 days horizon China Resources Beer is expected to under-perform the CDN IMPERIAL. In addition to that, China Resources is 2.83 times more volatile than CDN IMPERIAL BANK. It trades about -0.01 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.13 per unit of volatility. If you would invest 3,517 in CDN IMPERIAL BANK on August 31, 2024 and sell it today you would earn a total of 2,602 from holding CDN IMPERIAL BANK or generate 73.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
China Resources Beer vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| China Resources Beer |
| CDN IMPERIAL BANK |
China Resources and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CDN IMPERIAL
The main advantage of trading using opposite China Resources and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL'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 |
| CDN IMPERIAL vs. SIMS METAL MGT | CDN IMPERIAL vs. Sterling Construction | CDN IMPERIAL vs. Jacquet Metal Service | CDN IMPERIAL vs. Australian Agricultural |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |