Correlation Between Deluxe and China Resources
Can any of the company-specific risk be diversified away by investing in both Deluxe and China Resources 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 Deluxe and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and China Resources Beer, you can compare the effects of market volatilities on Deluxe and China Resources 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 Deluxe with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and China Resources.
Diversification Opportunities for Deluxe and China Resources
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Deluxe and China is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Deluxe 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 Deluxe are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Deluxe i.e., Deluxe and China Resources go up and down completely randomly.
Pair Corralation between Deluxe and China Resources
Considering the 90-day investment horizon Deluxe is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, Deluxe is 3.36 times less risky than China Resources. The stock trades about -0.03 of its potential returns per unit of risk. The China Resources Beer is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Deluxe vs. China Resources Beer
Performance |
| Timeline |
| Deluxe |
| China Resources Beer |
Deluxe and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and China Resources
The main advantage of trading using opposite Deluxe and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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