Correlation Between China Resources and Continental
Can any of the company-specific risk be diversified away by investing in both China Resources and Continental 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 Continental 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 Camden Property Trust, you can compare the effects of market volatilities on China Resources and Continental 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 Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Continental.
Diversification Opportunities for China Resources and Continental
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Continental is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of China Resources i.e., China Resources and Continental go up and down completely randomly.
Pair Corralation between China Resources and Continental
Assuming the 90 days horizon China Resources Beer is expected to generate 3.22 times more return on investment than Continental. However, China Resources is 3.22 times more volatile than Camden Property Trust. It trades about 0.02 of its potential returns per unit of risk. Camden Property Trust is currently generating about -0.22 per unit of risk. If you would invest 312.00 in China Resources Beer on September 23, 2024 and sell it today you would earn a total of 0.00 from holding China Resources Beer or generate 0.0% 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. Camden Property Trust
Performance |
| Timeline |
| China Resources Beer |
| Camden Property Trust |
China Resources and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Continental
The main advantage of trading using opposite China Resources and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| China Resources vs. Fomento Econmico Mexicano | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. BUDWEISER BREWUNSPADR4 |
| Continental vs. Equity Residential | Continental vs. AvalonBay Communities | Continental vs. UDR Inc | Continental vs. INVITATION HOMES DL |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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