Correlation Between China Resources and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both China Resources and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on China Resources and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and IMPERIAL TOBACCO.
Diversification Opportunities for China Resources and IMPERIAL TOBACCO
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and IMPERIAL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of China Resources i.e., China Resources and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between China Resources and IMPERIAL TOBACCO
Assuming the 90 days horizon China Resources Beer is expected to under-perform the IMPERIAL TOBACCO. In addition to that, China Resources is 2.73 times more volatile than IMPERIAL TOBACCO . It trades about -0.01 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.08 per unit of volatility. If you would invest 2,051 in IMPERIAL TOBACCO on September 13, 2024 and sell it today you would earn a total of 1,102 from holding IMPERIAL TOBACCO or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| China Resources Beer |
| IMPERIAL TOBACCO |
China Resources and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and IMPERIAL TOBACCO
The main advantage of trading using opposite China Resources and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. SIVERS SEMICONDUCTORS AB | China Resources vs. NorAm Drilling AS |
| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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