Correlation Between Canon and China Resources
Can any of the company-specific risk be diversified away by investing in both Canon 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 Canon and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Inc and China Resources Land, you can compare the effects of market volatilities on Canon 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 Canon with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and China Resources.
Diversification Opportunities for Canon and China Resources
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canon and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and Canon 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 Canon Inc 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 Land has no effect on the direction of Canon i.e., Canon and China Resources go up and down completely randomly.
Pair Corralation between Canon and China Resources
Assuming the 90 days trading horizon Canon is expected to generate 2.11 times less return on investment than China Resources. But when comparing it to its historical volatility, Canon Inc is 2.59 times less risky than China Resources. It trades about 0.09 of its potential returns per unit of risk. China Resources Land is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 191.00 in China Resources Land on September 3, 2024 and sell it today you would earn a total of 81.00 from holding China Resources Land or generate 42.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canon Inc vs. China Resources Land
Performance |
| Timeline |
| Canon Inc |
| China Resources Land |
Canon and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canon and China Resources
The main advantage of trading using opposite Canon and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon 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.| Canon vs. SOUTHWEST AIRLINES | Canon vs. CVS Health | Canon vs. ON SEMICONDUCTOR | Canon vs. SINGAPORE AIRLINES |
| China Resources vs. QURATE RETAIL INC | China Resources vs. SPARTAN STORES | China Resources vs. FAST RETAIL ADR | China Resources vs. Computer And Technologies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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