Correlation Between China Resources and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both China Resources and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on China Resources and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and HEMISPHERE EGY.
Diversification Opportunities for China Resources and HEMISPHERE EGY
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and HEMISPHERE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of China Resources i.e., China Resources and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between China Resources and HEMISPHERE EGY
Assuming the 90 days horizon China Resources Beer is expected to under-perform the HEMISPHERE EGY. In addition to that, China Resources is 2.46 times more volatile than HEMISPHERE EGY. It trades about -0.01 of its total potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.13 per unit of volatility. If you would invest 78.00 in HEMISPHERE EGY on September 1, 2024 and sell it today you would earn a total of 48.00 from holding HEMISPHERE EGY or generate 61.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. HEMISPHERE EGY
Performance |
| Timeline |
| China Resources Beer |
| HEMISPHERE EGY |
China Resources and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and HEMISPHERE EGY
The main advantage of trading using opposite China Resources and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. Origin Agritech |
| HEMISPHERE EGY vs. Salesforce | HEMISPHERE EGY vs. Choice Hotels International | HEMISPHERE EGY vs. Park Hotels Resorts | HEMISPHERE EGY vs. CODERE ONLINE LUX |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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