Correlation Between Capri Holdings and China Resources
Can any of the company-specific risk be diversified away by investing in both Capri Holdings 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 Capri Holdings and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings Limited and China Resources Beer, you can compare the effects of market volatilities on Capri Holdings 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 Capri Holdings with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and China Resources.
Diversification Opportunities for Capri Holdings and China Resources
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings Limited 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 Capri Holdings 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 Capri Holdings Limited 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 Capri Holdings i.e., Capri Holdings and China Resources go up and down completely randomly.
Pair Corralation between Capri Holdings and China Resources
Assuming the 90 days horizon Capri Holdings Limited is expected to generate 1.31 times more return on investment than China Resources. However, Capri Holdings is 1.31 times more volatile than China Resources Beer. It trades about 0.05 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 1,988 in Capri Holdings Limited on August 29, 2024 and sell it today you would earn a total of 52.00 from holding Capri Holdings Limited or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings Limited vs. China Resources Beer
Performance |
| Timeline |
| Capri Holdings |
| China Resources Beer |
Capri Holdings and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and China Resources
The main advantage of trading using opposite Capri Holdings and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings 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.| Capri Holdings vs. Australian Agricultural | Capri Holdings vs. China Resources Beer | Capri Holdings vs. Suntory Beverage Food | Capri Holdings vs. Dairy Farm International |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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