Correlation Between China Resources and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both China Resources and Martin Marietta 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 Martin Marietta 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 Martin Marietta Materials, you can compare the effects of market volatilities on China Resources and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Martin Marietta.
Diversification Opportunities for China Resources and Martin Marietta
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Martin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of China Resources i.e., China Resources and Martin Marietta go up and down completely randomly.
Pair Corralation between China Resources and Martin Marietta
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Martin Marietta. In addition to that, China Resources is 2.28 times more volatile than Martin Marietta Materials. It trades about -0.17 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.19 per unit of volatility. If you would invest 53,440 in Martin Marietta Materials on August 29, 2024 and sell it today you would earn a total of 3,520 from holding Martin Marietta Materials or generate 6.59% 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. Martin Marietta Materials
Performance |
| Timeline |
| China Resources Beer |
| Martin Marietta Materials |
China Resources and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Martin Marietta
The main advantage of trading using opposite China Resources and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| China Resources vs. Diamyd Medical AB | China Resources vs. Monster Beverage Corp | China Resources vs. Dairy Farm International | China Resources vs. INDOFOOD AGRI RES |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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