Correlation Between China Resources and Fomento Econmico
Can any of the company-specific risk be diversified away by investing in both China Resources and Fomento Econmico 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 Fomento Econmico 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 Fomento Econmico Mexicano, you can compare the effects of market volatilities on China Resources and Fomento Econmico 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 Fomento Econmico. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Fomento Econmico.
Diversification Opportunities for China Resources and Fomento Econmico
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Fomento is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Fomento Econmico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Econmico Mexicano 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 Fomento Econmico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Econmico Mexicano has no effect on the direction of China Resources i.e., China Resources and Fomento Econmico go up and down completely randomly.
Pair Corralation between China Resources and Fomento Econmico
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Fomento Econmico. In addition to that, China Resources is 1.7 times more volatile than Fomento Econmico Mexicano. It trades about -0.15 of its total potential returns per unit of risk. Fomento Econmico Mexicano is currently generating about -0.01 per unit of volatility. If you would invest 8,156 in Fomento Econmico Mexicano on October 29, 2024 and sell it today you would lose (56.00) from holding Fomento Econmico Mexicano or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Fomento Econmico Mexicano
Performance |
| Timeline |
| China Resources Beer |
| Fomento Econmico Mexicano |
China Resources and Fomento Econmico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Fomento Econmico
The main advantage of trading using opposite China Resources and Fomento Econmico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Fomento Econmico 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 Fomento Econmico will offset losses from the drop in Fomento Econmico's long position.| China Resources vs. Geely Automobile Holdings | China Resources vs. MeVis Medical Solutions | China Resources vs. CVR Medical Corp | China Resources vs. MEDICAL FACILITIES NEW |
| Fomento Econmico vs. BUDWEISER BREWUNSPADR4 | Fomento Econmico vs. China Resources Beer | Fomento Econmico vs. Molson Coors Brewing | Fomento Econmico vs. MOLSON RS BEVERAGE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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