Correlation Between China Resources and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both China Resources and DICKS Sporting 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 DICKS Sporting 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 DICKS Sporting Goods, you can compare the effects of market volatilities on China Resources and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and DICKS Sporting.
Diversification Opportunities for China Resources and DICKS Sporting
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and DICKS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of China Resources i.e., China Resources and DICKS Sporting go up and down completely randomly.
Pair Corralation between China Resources and DICKS Sporting
Assuming the 90 days horizon China Resources is expected to generate 2.63 times less return on investment than DICKS Sporting. In addition to that, China Resources is 1.45 times more volatile than DICKS Sporting Goods. It trades about 0.01 of its total potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.03 per unit of volatility. If you would invest 17,139 in DICKS Sporting Goods on August 25, 2024 and sell it today you would earn a total of 917.00 from holding DICKS Sporting Goods or generate 5.35% 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. DICKS Sporting Goods
Performance |
| Timeline |
| China Resources Beer |
| DICKS Sporting Goods |
China Resources and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and DICKS Sporting
The main advantage of trading using opposite China Resources and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Royal Unibrew AS |
| DICKS Sporting vs. Scandinavian Tobacco Group | DICKS Sporting vs. Sunstone Hotel Investors | DICKS Sporting vs. SHELF DRILLING LTD | DICKS Sporting vs. Regal Hotels International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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