Correlation Between China Resources and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both China Resources and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on China Resources and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Westrock Coffee.
Diversification Opportunities for China Resources and Westrock Coffee
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Westrock is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of China Resources i.e., China Resources and Westrock Coffee go up and down completely randomly.
Pair Corralation between China Resources and Westrock Coffee
Assuming the 90 days horizon China Resources Beer is expected to generate 1.43 times more return on investment than Westrock Coffee. However, China Resources is 1.43 times more volatile than Westrock Coffee. It trades about 0.04 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.15 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. Westrock Coffee
Performance |
| Timeline |
| China Resources Beer |
| Westrock Coffee |
China Resources and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Westrock Coffee
The main advantage of trading using opposite China Resources and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee'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 |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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