Correlation Between China Resources and CVS Health
Can any of the company-specific risk be diversified away by investing in both China Resources and CVS Health 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 CVS Health 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 CVS Health Corp, you can compare the effects of market volatilities on China Resources and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and CVS Health.
Diversification Opportunities for China Resources and CVS Health
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and CVS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of China Resources i.e., China Resources and CVS Health go up and down completely randomly.
Pair Corralation between China Resources and CVS Health
Assuming the 90 days horizon China Resources Beer is expected to under-perform the CVS Health. In addition to that, China Resources is 1.76 times more volatile than CVS Health Corp. It trades about -0.06 of its total potential returns per unit of risk. CVS Health Corp is currently generating about 0.0 per unit of volatility. If you would invest 7,102 in CVS Health Corp on January 20, 2024 and sell it today you would lose (163.00) from holding CVS Health Corp or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
China Resources Beer vs. CVS Health Corp
Performance |
| Timeline |
| China Resources Beer |
| CVS Health Corp |
China Resources and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and CVS Health
The main advantage of trading using opposite China Resources and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health'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 |
| CVS Health vs. Certara | CVS Health vs. HealthStream | CVS Health vs. Evolent Health | CVS Health vs. Streamline Health Solutions |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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