Correlation Between China Resources and COMBA TELECOM
Can any of the company-specific risk be diversified away by investing in both China Resources and COMBA TELECOM 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 COMBA TELECOM 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 COMBA TELECOM SYST, you can compare the effects of market volatilities on China Resources and COMBA TELECOM 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 COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and COMBA TELECOM.
Diversification Opportunities for China Resources and COMBA TELECOM
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and COMBA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST 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 COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of China Resources i.e., China Resources and COMBA TELECOM go up and down completely randomly.
Pair Corralation between China Resources and COMBA TELECOM
Assuming the 90 days horizon China Resources Beer is expected to under-perform the COMBA TELECOM. In addition to that, China Resources is 1.5 times more volatile than COMBA TELECOM SYST. It trades about -0.01 of its total potential returns per unit of risk. COMBA TELECOM SYST is currently generating about -0.01 per unit of volatility. If you would invest 14.00 in COMBA TELECOM SYST on September 3, 2024 and sell it today you would lose (2.00) from holding COMBA TELECOM SYST or give up 14.29% 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. COMBA TELECOM SYST
Performance |
| Timeline |
| China Resources Beer |
| COMBA TELECOM SYST |
China Resources and COMBA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and COMBA TELECOM
The main advantage of trading using opposite China Resources and COMBA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, COMBA TELECOM 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 COMBA TELECOM will offset losses from the drop in COMBA TELECOM's long position.| China Resources vs. Chuangs China Investments | China Resources vs. PennyMac Mortgage Investment | China Resources vs. Wyndham Hotels Resorts | China Resources vs. MHP Hotel AG |
| COMBA TELECOM vs. TOTAL GABON | COMBA TELECOM vs. Walgreens Boots Alliance | COMBA TELECOM vs. Peak Resources Limited |
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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