Correlation Between China Resources and Heineken
Can any of the company-specific risk be diversified away by investing in both China Resources and Heineken 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 Heineken 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 Heineken NV, you can compare the effects of market volatilities on China Resources and Heineken 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 Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Heineken.
Diversification Opportunities for China Resources and Heineken
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Heineken is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV 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 Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of China Resources i.e., China Resources and Heineken go up and down completely randomly.
Pair Corralation between China Resources and Heineken
Assuming the 90 days horizon China Resources Beer is expected to generate 1.78 times more return on investment than Heineken. However, China Resources is 1.78 times more volatile than Heineken NV. It trades about -0.02 of its potential returns per unit of risk. Heineken NV is currently generating about -0.03 per unit of risk. If you would invest 895.00 in China Resources Beer on August 24, 2024 and sell it today you would lose (211.00) from holding China Resources Beer or give up 23.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.2% |
| Values | Daily Returns |
China Resources Beer vs. Heineken NV
Performance |
| Timeline |
| China Resources Beer |
| Heineken NV |
China Resources and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Heineken
The main advantage of trading using opposite China Resources and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| China Resources vs. Barfresh Food Group | China Resources vs. Fbec Worldwide | China Resources vs. Flow Beverage Corp | China Resources vs. Eq Energy Drink |
| Heineken vs. Barfresh Food Group | Heineken vs. Fbec Worldwide | Heineken vs. Flow Beverage Corp | Heineken vs. Eq Energy Drink |
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 CEOs Directory module to screen CEOs from public companies around the world.
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