Correlation Between SPORT LISBOA and China Resources
Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA 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 SPORT LISBOA and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORT LISBOA E and China Resources Land, you can compare the effects of market volatilities on SPORT LISBOA 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 SPORT LISBOA with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and China Resources.
Diversification Opportunities for SPORT LISBOA and China Resources
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPORT and China is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and SPORT LISBOA 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 SPORT LISBOA E 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 Land has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and China Resources go up and down completely randomly.
Pair Corralation between SPORT LISBOA and China Resources
Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.8 times more return on investment than China Resources. However, SPORT LISBOA is 1.8 times more volatile than China Resources Land. It trades about -0.05 of its potential returns per unit of risk. China Resources Land is currently generating about -0.34 per unit of risk. If you would invest 318.00 in SPORT LISBOA E on October 13, 2024 and sell it today you would lose (9.00) from holding SPORT LISBOA E or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
SPORT LISBOA E vs. China Resources Land
Performance |
| Timeline |
| SPORT LISBOA E |
| China Resources Land |
SPORT LISBOA and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORT LISBOA and China Resources
The main advantage of trading using opposite SPORT LISBOA and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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.| SPORT LISBOA vs. PARKEN Sport Entertainment | SPORT LISBOA vs. Aluminum of | SPORT LISBOA vs. Perdoceo Education | SPORT LISBOA vs. TAL Education Group |
| China Resources vs. STRAYER EDUCATION | China Resources vs. G8 EDUCATION | China Resources vs. United Insurance Holdings | China Resources vs. Insurance Australia Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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