Correlation Between China Resources and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both China Resources and CenterPoint 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 CenterPoint 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 CenterPoint Energy, you can compare the effects of market volatilities on China Resources and CenterPoint 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CenterPoint Energy.
Diversification Opportunities for China Resources and CenterPoint Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and CenterPoint is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of China Resources i.e., China Resources and CenterPoint Energy go up and down completely randomly.
Pair Corralation between China Resources and CenterPoint Energy
Assuming the 90 days horizon China Resources Beer is expected to under-perform the CenterPoint Energy. In addition to that, China Resources is 2.13 times more volatile than CenterPoint Energy. It trades about -0.08 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.42 per unit of volatility. If you would invest 2,581 in CenterPoint Energy on September 3, 2024 and sell it today you would earn a total of 459.00 from holding CenterPoint Energy or generate 17.78% 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. CenterPoint Energy
Performance |
| Timeline |
| China Resources Beer |
| CenterPoint Energy |
China Resources and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CenterPoint Energy
The main advantage of trading using opposite China Resources and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CenterPoint 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| China Resources vs. Chuangs China Investments | China Resources vs. PennyMac Mortgage Investment | China Resources vs. Wyndham Hotels Resorts | China Resources vs. MHP Hotel AG |
| CenterPoint Energy vs. ENN Energy Holdings | CenterPoint Energy vs. Superior Plus Corp | CenterPoint Energy vs. NMI Holdings | CenterPoint Energy vs. Origin Agritech |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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