Correlation Between China Resources and Marks
Can any of the company-specific risk be diversified away by investing in both China Resources and Marks 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 Marks 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 Marks and Spencer, you can compare the effects of market volatilities on China Resources and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Marks.
Diversification Opportunities for China Resources and Marks
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Marks is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of China Resources i.e., China Resources and Marks go up and down completely randomly.
Pair Corralation between China Resources and Marks
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Marks. In addition to that, China Resources is 1.99 times more volatile than Marks and Spencer. It trades about -0.35 of its total potential returns per unit of risk. Marks and Spencer is currently generating about -0.11 per unit of volatility. If you would invest 474.00 in Marks and Spencer on October 10, 2024 and sell it today you would lose (13.00) from holding Marks and Spencer or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Marks and Spencer
Performance |
| Timeline |
| China Resources Beer |
| Marks and Spencer |
China Resources and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Marks
The main advantage of trading using opposite China Resources and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| China Resources vs. Aluminum of | China Resources vs. Penta Ocean Construction Co | China Resources vs. SIERRA METALS | China Resources vs. Daito Trust Construction |
| Marks vs. MIRAMAR HOTEL INV | Marks vs. TRADEDOUBLER AB SK | Marks vs. Fast Retailing Co | Marks vs. Choice Hotels International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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