Correlation Between GMO Internet and China Resources
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and China Resources Beer, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and China Resources.
Diversification Opportunities for GMO Internet and China Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GMO and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet 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 GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and China Resources go up and down completely randomly.
Pair Corralation between GMO Internet and China Resources
Assuming the 90 days horizon GMO Internet is expected to generate 2.26 times more return on investment than China Resources. However, GMO Internet is 2.26 times more volatile than China Resources Beer. It trades about 0.09 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest 337.00 in GMO Internet on October 16, 2024 and sell it today you would earn a total of 1,253 from holding GMO Internet or generate 371.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. China Resources Beer
Performance |
| Timeline |
| GMO Internet |
| China Resources Beer |
GMO Internet and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and China Resources
The main advantage of trading using opposite GMO Internet and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. SCOTT TECHNOLOGY | GMO Internet vs. DXC Technology Co | GMO Internet vs. Wayside Technology Group | GMO Internet vs. TITAN MACHINERY |
| China Resources vs. Renesas Electronics | China Resources vs. National Beverage Corp | China Resources vs. STMicroelectronics NV | China Resources vs. Nucletron Electronic Aktiengesellschaft |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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