Correlation Between China Resources and GANGLONG CHINA
Can any of the company-specific risk be diversified away by investing in both China Resources and GANGLONG CHINA 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 GANGLONG CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Land and GANGLONG CHINA PRGRLTD, you can compare the effects of market volatilities on China Resources and GANGLONG CHINA 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 GANGLONG CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and GANGLONG CHINA.
Diversification Opportunities for China Resources and GANGLONG CHINA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and GANGLONG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and GANGLONG CHINA PRGRLTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GANGLONG CHINA PRGRLTD 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 Land are associated (or correlated) with GANGLONG CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GANGLONG CHINA PRGRLTD has no effect on the direction of China Resources i.e., China Resources and GANGLONG CHINA go up and down completely randomly.
Pair Corralation between China Resources and GANGLONG CHINA
Assuming the 90 days horizon China Resources Land is expected to under-perform the GANGLONG CHINA. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Land is 12.58 times less risky than GANGLONG CHINA. The stock trades about -0.12 of its potential returns per unit of risk. The GANGLONG CHINA PRGRLTD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.85 in GANGLONG CHINA PRGRLTD on October 14, 2024 and sell it today you would lose (1.05) from holding GANGLONG CHINA PRGRLTD or give up 56.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Land vs. GANGLONG CHINA PRGRLTD
Performance |
| Timeline |
| China Resources Land |
| GANGLONG CHINA PRGRLTD |
China Resources and GANGLONG CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and GANGLONG CHINA
The main advantage of trading using opposite China Resources and GANGLONG CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, GANGLONG CHINA 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 GANGLONG CHINA will offset losses from the drop in GANGLONG CHINA's long position.| China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. SIVERS SEMICONDUCTORS AB | China Resources vs. Talanx AG |
| GANGLONG CHINA vs. MeVis Medical Solutions | GANGLONG CHINA vs. FIREWEED METALS P | GANGLONG CHINA vs. CREO MEDICAL GRP | GANGLONG CHINA vs. Merit Medical Systems |
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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