Correlation Between Corporate Office and China Resources
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and China Resources Beer, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and China Resources.
Diversification Opportunities for Corporate Office and China Resources
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office 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 Corporate Office 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 Corporate Office 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 Corporate Office i.e., Corporate Office and China Resources go up and down completely randomly.
Pair Corralation between Corporate Office and China Resources
Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.42 times more return on investment than China Resources. However, Corporate Office Properties is 2.36 times less risky than China Resources. It trades about 0.08 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest 2,057 in Corporate Office Properties on September 1, 2024 and sell it today you would earn a total of 1,023 from holding Corporate Office Properties or generate 49.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. China Resources Beer
Performance |
| Timeline |
| Corporate Office Pro |
| China Resources Beer |
Corporate Office and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and China Resources
The main advantage of trading using opposite Corporate Office and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
| China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. NMI Holdings | China Resources vs. Origin Agritech |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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