Correlation Between China Vanke and China Resources
Can any of the company-specific risk be diversified away by investing in both China Vanke 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 China Vanke and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Vanke Co and China Resources Land, you can compare the effects of market volatilities on China Vanke 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 China Vanke with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and China Resources.
Diversification Opportunities for China Vanke and China Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and China is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and China Vanke 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 Vanke Co 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 Land has no effect on the direction of China Vanke i.e., China Vanke and China Resources go up and down completely randomly.
Pair Corralation between China Vanke and China Resources
Assuming the 90 days horizon China Vanke Co is expected to under-perform the China Resources. In addition to that, China Vanke is 6.79 times more volatile than China Resources Land. It trades about -0.02 of its total potential returns per unit of risk. China Resources Land is currently generating about -0.1 per unit of volatility. If you would invest 325.00 in China Resources Land on January 26, 2024 and sell it today you would lose (29.00) from holding China Resources Land or give up 8.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Vanke Co vs. China Resources Land
Performance |
Timeline |
China Vanke |
China Resources Land |
China Vanke and China Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Vanke and China Resources
The main advantage of trading using opposite China Vanke and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke 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.China Vanke vs. CK Asset Holdings | China Vanke vs. Agile Group Holdings | China Vanke vs. China Resources Land |
China Resources vs. Sun Hung Kai | China Resources vs. China Overseas Land | China Resources vs. Sino Land Co | China Resources vs. Sun Hung Kai |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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