Correlation Between China Resources and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both China Resources and Jiangsu Expressway 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 Jiangsu Expressway 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 Jiangsu Expressway Co, you can compare the effects of market volatilities on China Resources and Jiangsu Expressway 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 Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Jiangsu Expressway.
Diversification Opportunities for China Resources and Jiangsu Expressway
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Jiangsu is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway 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 Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of China Resources i.e., China Resources and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between China Resources and Jiangsu Expressway
Assuming the 90 days horizon China Resources is expected to generate 1.41 times less return on investment than Jiangsu Expressway. In addition to that, China Resources is 1.09 times more volatile than Jiangsu Expressway Co. It trades about 0.01 of its total potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.01 per unit of volatility. If you would invest 1,921 in Jiangsu Expressway Co on August 28, 2024 and sell it today you would lose (22.00) from holding Jiangsu Expressway Co or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Jiangsu Expressway Co
Performance |
| Timeline |
| China Resources Beer |
| Jiangsu Expressway |
China Resources and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Jiangsu Expressway
The main advantage of trading using opposite China Resources and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| China Resources vs. Budweiser Brewing | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. Anheuser Busch Inbev | China Resources vs. Molson Coors Brewing |
| Jiangsu Expressway vs. Freedom Internet Group | Jiangsu Expressway vs. Plexus Corp | Jiangsu Expressway vs. Weibo Corp | Jiangsu Expressway vs. Casio Computer Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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