Correlation Between Fevertree Drinks and China Resources
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and China Resources Beer, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and China Resources.
Diversification Opportunities for Fevertree Drinks and China Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fevertree and China is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC 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 Fevertree Drinks 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 Fevertree Drinks PLC 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 Fevertree Drinks i.e., Fevertree Drinks and China Resources go up and down completely randomly.
Pair Corralation between Fevertree Drinks and China Resources
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 0.61 times more return on investment than China Resources. However, Fevertree Drinks PLC is 1.64 times less risky than China Resources. It trades about -0.13 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.17 per unit of risk. If you would invest 885.00 in Fevertree Drinks PLC on August 29, 2024 and sell it today you would lose (60.00) from holding Fevertree Drinks PLC or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. China Resources Beer
Performance |
| Timeline |
| Fevertree Drinks PLC |
| China Resources Beer |
Fevertree Drinks and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and China Resources
The main advantage of trading using opposite Fevertree Drinks and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
| China Resources vs. Diamyd Medical AB | China Resources vs. Monster Beverage Corp | China Resources vs. Dairy Farm International | China Resources vs. INDOFOOD AGRI RES |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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