Correlation Between China Resources and Wizz Air
Can any of the company-specific risk be diversified away by investing in both China Resources and Wizz Air 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 Wizz Air 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 Wizz Air Holdings, you can compare the effects of market volatilities on China Resources and Wizz Air 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 Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Wizz Air.
Diversification Opportunities for China Resources and Wizz Air
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Wizz is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings 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 Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of China Resources i.e., China Resources and Wizz Air go up and down completely randomly.
Pair Corralation between China Resources and Wizz Air
Assuming the 90 days horizon China Resources Beer is expected to generate 0.93 times more return on investment than Wizz Air. However, China Resources Beer is 1.07 times less risky than Wizz Air. It trades about -0.02 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.04 per unit of risk. If you would invest 496.00 in China Resources Beer on October 16, 2024 and sell it today you would lose (212.00) from holding China Resources Beer or give up 42.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Wizz Air Holdings
Performance |
| Timeline |
| China Resources Beer |
| Wizz Air Holdings |
China Resources and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Wizz Air
The main advantage of trading using opposite China Resources and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Wizz Air 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 Wizz Air will offset losses from the drop in Wizz Air's long position.| China Resources vs. Strategic Education | China Resources vs. Shenandoah Telecommunications | China Resources vs. Charter Communications | China Resources vs. GMO Internet |
| Wizz Air vs. Beta Systems Software | Wizz Air vs. China Resources Beer | Wizz Air vs. Guidewire Software | Wizz Air vs. UPDATE SOFTWARE |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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