Correlation Between Fletcher Building and China Resources
Can any of the company-specific risk be diversified away by investing in both Fletcher Building 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 Fletcher Building and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fletcher Building Ltd and China Resources Cement, you can compare the effects of market volatilities on Fletcher Building 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 Fletcher Building with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fletcher Building and China Resources.
Diversification Opportunities for Fletcher Building and China Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fletcher and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fletcher Building Ltd and China Resources Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Cement and Fletcher Building 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 Fletcher Building Ltd 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 Cement has no effect on the direction of Fletcher Building i.e., Fletcher Building and China Resources go up and down completely randomly.
Pair Corralation between Fletcher Building and China Resources
If you would invest 295.00 in Fletcher Building Ltd on October 23, 2024 and sell it today you would earn a total of 2.00 from holding Fletcher Building Ltd or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Fletcher Building Ltd vs. China Resources Cement
Performance |
| Timeline |
| Fletcher Building |
| China Resources Cement |
Fletcher Building and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fletcher Building and China Resources
The main advantage of trading using opposite Fletcher Building and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fletcher Building 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.| Fletcher Building vs. Cementos Pacasmayo SAA | Fletcher Building vs. Summit Materials | Fletcher Building vs. Eagle Materials | Fletcher Building vs. CRH PLC ADR |
| China Resources vs. PT Semen Indonesia | China Resources vs. Fletcher Building Ltd | China Resources vs. Buzzi Unicem SpA | China Resources vs. UltraTech Cement Limited |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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