Correlation Between DICKS Sporting and China Resources
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting 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 DICKS Sporting and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DICKS Sporting Goods and China Resources Gas, you can compare the effects of market volatilities on DICKS Sporting 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 DICKS Sporting with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and China Resources.
Diversification Opportunities for DICKS Sporting and China Resources
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DICKS and China is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and China Resources Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Gas and DICKS Sporting 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 DICKS Sporting Goods 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 Gas has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and China Resources go up and down completely randomly.
Pair Corralation between DICKS Sporting and China Resources
Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 1.28 times more return on investment than China Resources. However, DICKS Sporting is 1.28 times more volatile than China Resources Gas. It trades about 0.21 of its potential returns per unit of risk. China Resources Gas is currently generating about -0.29 per unit of risk. If you would invest 21,880 in DICKS Sporting Goods on November 5, 2024 and sell it today you would earn a total of 2,070 from holding DICKS Sporting Goods or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. China Resources Gas
Performance |
| Timeline |
| DICKS Sporting Goods |
| China Resources Gas |
DICKS Sporting and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and China Resources
The main advantage of trading using opposite DICKS Sporting and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting 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.| DICKS Sporting vs. CLOVER HEALTH INV | DICKS Sporting vs. DAIDO METAL TD | DICKS Sporting vs. Universal Health Realty | DICKS Sporting vs. FIREWEED METALS P |
| China Resources vs. BioNTech SE | China Resources vs. Minerals Technologies | China Resources vs. GLG LIFE TECH | China Resources vs. AOYAMA TRADING |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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