Correlation Between Mastercard and China Resources
Can any of the company-specific risk be diversified away by investing in both Mastercard 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 Mastercard and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and China Resources Beer, you can compare the effects of market volatilities on Mastercard 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 Mastercard with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and China Resources.
Diversification Opportunities for Mastercard and China Resources
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard 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 Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and China Resources go up and down completely randomly.
Pair Corralation between Mastercard and China Resources
If you would invest 50,558 in Mastercard on September 3, 2024 and sell it today you would earn a total of 2,736 from holding Mastercard or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Mastercard vs. China Resources Beer
Performance |
| Timeline |
| Mastercard |
| China Resources Beer |
Mastercard and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and China Resources
The main advantage of trading using opposite Mastercard and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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.| Mastercard vs. American Express | Mastercard vs. PayPal Holdings | Mastercard vs. Capital One Financial | Mastercard vs. Upstart Holdings |
| China Resources vs. Tsingtao Brewery Co | China Resources vs. Budweiser Brewing | China Resources vs. Boston Beer | China Resources vs. Anheuser Busch Inbev |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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