Correlation Between China Resources and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both China Resources and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on China Resources and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Electronic Arts.
Diversification Opportunities for China Resources and Electronic Arts
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Electronic is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of China Resources i.e., China Resources and Electronic Arts go up and down completely randomly.
Pair Corralation between China Resources and Electronic Arts
Assuming the 90 days horizon China Resources Beer is expected to generate 0.8 times more return on investment than Electronic Arts. However, China Resources Beer is 1.25 times less risky than Electronic Arts. It trades about 0.04 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.07 per unit of risk. If you would invest 310.00 in China Resources Beer on November 30, 2024 and sell it today you would earn a total of 8.00 from holding China Resources Beer or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Electronic Arts
Performance |
| Timeline |
| China Resources Beer |
| Electronic Arts |
China Resources and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Electronic Arts
The main advantage of trading using opposite China Resources and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| China Resources vs. PROSIEBENSAT1 MEDIADR4 | China Resources vs. Cairo Communication SpA | China Resources vs. Ribbon Communications | China Resources vs. Comba Telecom Systems |
| Electronic Arts vs. CITY OFFICE REIT | Electronic Arts vs. BII Railway Transportation | Electronic Arts vs. CENTURIA OFFICE REIT | Electronic Arts vs. PARKEN SPORT ENT |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |