Correlation Between Netflix and China Resources
Can any of the company-specific risk be diversified away by investing in both Netflix 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 Netflix and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and China Resources Cement, you can compare the effects of market volatilities on Netflix 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 Netflix with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and China Resources.
Diversification Opportunities for Netflix and China Resources
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Netflix and China is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Netflix 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 Netflix 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 Netflix 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 Netflix i.e., Netflix and China Resources go up and down completely randomly.
Pair Corralation between Netflix and China Resources
Given the investment horizon of 90 days Netflix is expected to generate 0.82 times more return on investment than China Resources. However, Netflix is 1.22 times less risky than China Resources. It trades about 0.29 of its potential returns per unit of risk. China Resources Cement is currently generating about -0.12 per unit of risk. If you would invest 71,300 in Netflix on September 12, 2024 and sell it today you would earn a total of 20,035 from holding Netflix or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netflix vs. China Resources Cement
Performance |
| Timeline |
| Netflix |
| China Resources Cement |
Netflix and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and China Resources
The main advantage of trading using opposite Netflix and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix 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.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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