Correlation Between China Resources and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both China Resources and CarsalesCom 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 CarsalesCom 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 CarsalesCom Ltd ADR, you can compare the effects of market volatilities on China Resources and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CarsalesCom.
Diversification Opportunities for China Resources and CarsalesCom
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and CarsalesCom is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of China Resources i.e., China Resources and CarsalesCom go up and down completely randomly.
Pair Corralation between China Resources and CarsalesCom
Assuming the 90 days horizon China Resources Beer is expected to generate 1.44 times more return on investment than CarsalesCom. However, China Resources is 1.44 times more volatile than CarsalesCom Ltd ADR. It trades about 0.04 of its potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about -0.22 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 Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
China Resources Beer vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| China Resources Beer |
| CarsalesCom ADR |
China Resources and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CarsalesCom
The main advantage of trading using opposite China Resources and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom'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 |
| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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