Correlation Between Summit Hotel and China Resources
Can any of the company-specific risk be diversified away by investing in both Summit Hotel 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 Summit Hotel and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and China Resources Beer, you can compare the effects of market volatilities on Summit Hotel 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 Summit Hotel with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and China Resources.
Diversification Opportunities for Summit Hotel and China Resources
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and China is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties 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 Summit Hotel 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 Summit Hotel Properties 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 Summit Hotel i.e., Summit Hotel and China Resources go up and down completely randomly.
Pair Corralation between Summit Hotel and China Resources
Assuming the 90 days horizon Summit Hotel is expected to generate 1.65 times less return on investment than China Resources. But when comparing it to its historical volatility, Summit Hotel Properties is 1.96 times less risky than China Resources. It trades about 0.03 of its potential returns per unit of risk. China Resources Beer is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 302.00 in China Resources Beer on September 3, 2024 and sell it today you would earn a total of 10.00 from holding China Resources Beer or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. China Resources Beer
Performance |
| Timeline |
| Summit Hotel Properties |
| China Resources Beer |
Summit Hotel and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and China Resources
The main advantage of trading using opposite Summit Hotel and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel 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.| Summit Hotel vs. PSI Software AG | Summit Hotel vs. Cogent Communications Holdings | Summit Hotel vs. CyberArk Software | Summit Hotel vs. INTERSHOP Communications Aktiengesellschaft |
| China Resources vs. Chuangs China Investments | China Resources vs. PennyMac Mortgage Investment | China Resources vs. Wyndham Hotels Resorts | China Resources vs. MHP Hotel AG |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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