Correlation Between China Communications and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both China Communications and Suntory Beverage 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 Communications and Suntory Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Suntory Beverage Food, you can compare the effects of market volatilities on China Communications and Suntory Beverage 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 Communications with a short position of Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Suntory Beverage.
Diversification Opportunities for China Communications and Suntory Beverage
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Suntory is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food and China Communications 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 Communications Services are associated (or correlated) with Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of China Communications i.e., China Communications and Suntory Beverage go up and down completely randomly.
Pair Corralation between China Communications and Suntory Beverage
Assuming the 90 days horizon China Communications Services is expected to generate 3.66 times more return on investment than Suntory Beverage. However, China Communications is 3.66 times more volatile than Suntory Beverage Food. It trades about 0.07 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about 0.03 per unit of risk. If you would invest 20.00 in China Communications Services on September 1, 2024 and sell it today you would earn a total of 28.00 from holding China Communications Services or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Suntory Beverage Food
Performance |
| Timeline |
| China Communications |
| Suntory Beverage Food |
China Communications and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Suntory Beverage
The main advantage of trading using opposite China Communications and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Suntory Beverage 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 Suntory Beverage will offset losses from the drop in Suntory Beverage's long position.| China Communications vs. ATT Inc | China Communications vs. Deutsche Telekom AG | China Communications vs. Superior Plus Corp | China Communications vs. NMI Holdings |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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