Correlation Between China Resources and Vita Coco
Can any of the company-specific risk be diversified away by investing in both China Resources and Vita Coco 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 Vita Coco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Vita Coco, you can compare the effects of market volatilities on China Resources and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Vita Coco.
Diversification Opportunities for China Resources and Vita Coco
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Vita is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Beer are associated (or correlated) with Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of China Resources i.e., China Resources and Vita Coco go up and down completely randomly.
Pair Corralation between China Resources and Vita Coco
Assuming the 90 days horizon China Resources Beer is expected to generate 3.82 times more return on investment than Vita Coco. However, China Resources is 3.82 times more volatile than Vita Coco. It trades about 0.04 of its potential returns per unit of risk. Vita Coco is currently generating about -0.31 per unit of risk. If you would invest 261.00 in China Resources Beer on October 12, 2024 and sell it today you would earn a total of 6.00 from holding China Resources Beer or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
China Resources Beer vs. Vita Coco
Performance |
| Timeline |
| China Resources Beer |
| Vita Coco |
China Resources and Vita Coco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Vita Coco
The main advantage of trading using opposite China Resources and Vita Coco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Vita Coco 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 Vita Coco will offset losses from the drop in Vita Coco's long position.| China Resources vs. Tsingtao Brewery Co | China Resources vs. Budweiser Brewing | China Resources vs. Boston Beer | China Resources vs. Anheuser Busch Inbev |
| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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