Correlation Between China Resources and Daily Journal
Can any of the company-specific risk be diversified away by investing in both China Resources and Daily Journal 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 Daily Journal 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 Daily Journal Corp, you can compare the effects of market volatilities on China Resources and Daily Journal 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 Daily Journal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Daily Journal.
Diversification Opportunities for China Resources and Daily Journal
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Daily is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Daily Journal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daily Journal Corp 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 Daily Journal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daily Journal Corp has no effect on the direction of China Resources i.e., China Resources and Daily Journal go up and down completely randomly.
Pair Corralation between China Resources and Daily Journal
Assuming the 90 days horizon China Resources Beer is expected to generate 2.3 times more return on investment than Daily Journal. However, China Resources is 2.3 times more volatile than Daily Journal Corp. It trades about 0.12 of its potential returns per unit of risk. Daily Journal Corp is currently generating about -0.34 per unit of risk. If you would invest 261.00 in China Resources Beer on October 25, 2024 and sell it today you would earn a total of 32.00 from holding China Resources Beer or generate 12.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
China Resources Beer vs. Daily Journal Corp
Performance |
| Timeline |
| China Resources Beer |
| Daily Journal Corp |
China Resources and Daily Journal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Daily Journal
The main advantage of trading using opposite China Resources and Daily Journal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Daily Journal 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 Daily Journal will offset losses from the drop in Daily Journal's long position.| China Resources vs. Molson Coors Brewing | China Resources vs. Budweiser Brewing | China Resources vs. Boston Beer | China Resources vs. Anheuser Busch InBev SANV |
| Daily Journal vs. Meridianlink | Daily Journal vs. CoreCard Corp | Daily Journal vs. Enfusion | Daily Journal vs. Issuer Direct 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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