Correlation Between China Resources and Alphabet
Can any of the company-specific risk be diversified away by investing in both China Resources and Alphabet 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 China Resources and Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Alphabet, you can compare the effects of market volatilities on China Resources and Alphabet 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 China Resources with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Alphabet.
Diversification Opportunities for China Resources and Alphabet
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Alphabet is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet and China Resources 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 China Resources Beer are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of China Resources i.e., China Resources and Alphabet go up and down completely randomly.
Pair Corralation between China Resources and Alphabet
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Alphabet. In addition to that, China Resources is 2.3 times more volatile than Alphabet. It trades about -0.16 of its total potential returns per unit of risk. Alphabet is currently generating about 0.28 per unit of volatility. If you would invest 13,716 in Alphabet on January 20, 2024 and sell it today you would earn a total of 1,052 from holding Alphabet or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
China Resources Beer vs. Alphabet
Performance |
| Timeline |
| China Resources Beer |
| Alphabet |
China Resources and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Alphabet
The main advantage of trading using opposite China Resources and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| China Resources vs. Superior Plus Corp | China Resources vs. Origin Agritech | China Resources vs. SIVERS SEMICONDUCTORS AB | China Resources vs. NorAm Drilling AS |
| Alphabet vs. Superior Plus Corp | Alphabet vs. Origin Agritech | Alphabet vs. SIVERS SEMICONDUCTORS AB | Alphabet vs. NorAm Drilling AS |
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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