Correlation Between China Resources and China Vanke
Can any of the company-specific risk be diversified away by investing in both China Resources and China Vanke 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 China Vanke 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 China Vanke Co, you can compare the effects of market volatilities on China Resources and China Vanke 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 China Vanke. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and China Vanke.
Diversification Opportunities for China Resources and China Vanke
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke 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 China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of China Resources i.e., China Resources and China Vanke go up and down completely randomly.
Pair Corralation between China Resources and China Vanke
Assuming the 90 days horizon China Resources is expected to generate 4.09 times less return on investment than China Vanke. But when comparing it to its historical volatility, China Resources Land is 2.66 times less risky than China Vanke. It trades about 0.03 of its potential returns per unit of risk. China Vanke Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 35.00 in China Vanke Co on November 9, 2024 and sell it today you would lose (2.00) from holding China Vanke Co or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.66% |
| Values | Daily Returns |
China Resources Land vs. China Vanke Co
Performance |
| Timeline |
| China Resources Land |
| China Vanke |
China Resources and China Vanke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and China Vanke
The main advantage of trading using opposite China Resources and China Vanke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, China Vanke 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 Vanke will offset losses from the drop in China Vanke's long position.| China Resources vs. China Overseas Land | China Resources vs. Longfor Group Holdings | China Resources vs. Sun Hung Kai | China Resources vs. Longfor Properties Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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