Correlation Between China Resources and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both China Resources and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Power and BJs Restaurants, you can compare the effects of market volatilities on China Resources and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and BJs Restaurants.
Diversification Opportunities for China Resources and BJs Restaurants
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and BJs is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Power and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 Power are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of China Resources i.e., China Resources and BJs Restaurants go up and down completely randomly.
Pair Corralation between China Resources and BJs Restaurants
Assuming the 90 days horizon China Resources Power is expected to under-perform the BJs Restaurants. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Resources Power is 1.81 times less risky than BJs Restaurants. The pink sheet trades about -0.13 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,013 in BJs Restaurants on September 4, 2024 and sell it today you would earn a total of 720.00 from holding BJs Restaurants or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Power vs. BJs Restaurants
Performance |
| Timeline |
| China Resources Power |
| BJs Restaurants |
China Resources and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and BJs Restaurants
The main advantage of trading using opposite China Resources and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| China Resources vs. BJs Restaurants | China Resources vs. Commonwealth Bank of | China Resources vs. Arrow Financial | China Resources vs. Barings BDC |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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