Correlation Between Cardinal Health and China Resources
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and China Resources 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 Cardinal Health and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and China Resources Beer, you can compare the effects of market volatilities on Cardinal Health and China Resources 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 Cardinal Health with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and China Resources.
Diversification Opportunities for Cardinal Health and China Resources
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cardinal and China is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Cardinal Health 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 Cardinal Health are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Cardinal Health i.e., Cardinal Health and China Resources go up and down completely randomly.
Pair Corralation between Cardinal Health and China Resources
Assuming the 90 days horizon Cardinal Health is expected to generate 0.46 times more return on investment than China Resources. However, Cardinal Health is 2.16 times less risky than China Resources. It trades about 0.08 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest 7,479 in Cardinal Health on August 31, 2024 and sell it today you would earn a total of 4,116 from holding Cardinal Health or generate 55.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. China Resources Beer
Performance |
| Timeline |
| Cardinal Health |
| China Resources Beer |
Cardinal Health and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and China Resources
The main advantage of trading using opposite Cardinal Health and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Cardinal Health vs. China Resources Beer | Cardinal Health vs. AIR PRODCHEMICALS | Cardinal Health vs. GOODYEAR T RUBBER | Cardinal Health vs. APPLIED MATERIALS |
| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. Origin Agritech |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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