Correlation Between Hanesbrands and China Resources
Can any of the company-specific risk be diversified away by investing in both Hanesbrands 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 Hanesbrands and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and China Resources Cement, you can compare the effects of market volatilities on Hanesbrands 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 Hanesbrands with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and China Resources.
Diversification Opportunities for Hanesbrands and China Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanesbrands and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands 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 Hanesbrands 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 Hanesbrands 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 Hanesbrands i.e., Hanesbrands and China Resources go up and down completely randomly.
Pair Corralation between Hanesbrands and China Resources
Considering the 90-day investment horizon Hanesbrands is expected to generate 0.91 times more return on investment than China Resources. However, Hanesbrands is 1.1 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Cement is currently generating about -0.02 per unit of risk. If you would invest 472.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 369.00 from holding Hanesbrands or generate 78.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. China Resources Cement
Performance |
| Timeline |
| Hanesbrands |
| China Resources Cement |
Hanesbrands and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and China Resources
The main advantage of trading using opposite Hanesbrands and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands 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.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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