Correlation Between China Resources and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both China Resources and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on China Resources and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and FuelCell Energy.
Diversification Opportunities for China Resources and FuelCell Energy
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and FuelCell is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of China Resources i.e., China Resources and FuelCell Energy go up and down completely randomly.
Pair Corralation between China Resources and FuelCell Energy
Assuming the 90 days horizon China Resources Beer is expected to generate 0.62 times more return on investment than FuelCell Energy. However, China Resources Beer is 1.62 times less risky than FuelCell Energy. It trades about 0.04 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.32 per unit of risk. If you would invest 284.00 in China Resources Beer on November 7, 2024 and sell it today you would earn a total of 4.00 from holding China Resources Beer or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.73% |
| Values | Daily Returns |
China Resources Beer vs. FuelCell Energy
Performance |
| Timeline |
| China Resources Beer |
| FuelCell Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
China Resources and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and FuelCell Energy
The main advantage of trading using opposite China Resources and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| China Resources vs. Sterling Construction | China Resources vs. Addtech AB | China Resources vs. DAIRY FARM INTL | China Resources vs. WIMFARM SA EO |
| FuelCell Energy vs. BJs Restaurants | FuelCell Energy vs. Wayside Technology Group | FuelCell Energy vs. Luckin Coffee | FuelCell Energy vs. VIVA WINE GROUP |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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