Correlation Between China Resources and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both China Resources and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on China Resources and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and STORE ELECTRONIC.
Diversification Opportunities for China Resources and STORE ELECTRONIC
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and STORE is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of China Resources i.e., China Resources and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between China Resources and STORE ELECTRONIC
Assuming the 90 days horizon China Resources Beer is expected to under-perform the STORE ELECTRONIC. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.48 times less risky than STORE ELECTRONIC. The stock trades about -0.01 of its potential returns per unit of risk. The STORE ELECTRONIC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,751 in STORE ELECTRONIC on September 4, 2024 and sell it today you would earn a total of 1,329 from holding STORE ELECTRONIC or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
China Resources Beer vs. STORE ELECTRONIC
Performance |
| Timeline |
| China Resources Beer |
| STORE ELECTRONIC |
China Resources and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and STORE ELECTRONIC
The main advantage of trading using opposite China Resources and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| China Resources vs. HF SINCLAIR P | China Resources vs. PKSHA TECHNOLOGY INC | China Resources vs. WIZZ AIR HLDGUNSPADR4 | China Resources vs. Alaska Air Group |
| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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