Correlation Between China Resources and EVN AG
Can any of the company-specific risk be diversified away by investing in both China Resources and EVN AG 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 EVN AG 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 EVN AG, you can compare the effects of market volatilities on China Resources and EVN AG 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 EVN AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and EVN AG.
Diversification Opportunities for China Resources and EVN AG
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and EVN is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and EVN AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG 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 EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG has no effect on the direction of China Resources i.e., China Resources and EVN AG go up and down completely randomly.
Pair Corralation between China Resources and EVN AG
Assuming the 90 days horizon China Resources Beer is expected to under-perform the EVN AG. In addition to that, China Resources is 2.26 times more volatile than EVN AG. It trades about -0.02 of its total potential returns per unit of risk. EVN AG is currently generating about 0.04 per unit of volatility. If you would invest 1,841 in EVN AG on November 5, 2024 and sell it today you would earn a total of 449.00 from holding EVN AG or generate 24.39% 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. EVN AG
Performance |
| Timeline |
| China Resources Beer |
| EVN AG |
China Resources and EVN AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and EVN AG
The main advantage of trading using opposite China Resources and EVN AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, EVN AG 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 EVN AG will offset losses from the drop in EVN AG's long position.| China Resources vs. Columbia Sportswear | China Resources vs. EIDESVIK OFFSHORE NK | China Resources vs. Transport International Holdings | China Resources vs. Lendlease Group |
| EVN AG vs. CAIRN HOMES EO | EVN AG vs. New Residential Investment | EVN AG vs. OFFICE DEPOT | EVN AG vs. Addus HomeCare |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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