Correlation Between Corus Entertainment and China Foods

Can any of the company-specific risk be diversified away by investing in both Corus Entertainment and China Foods 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 Corus Entertainment and China Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corus Entertainment and China Foods Ltd, you can compare the effects of market volatilities on Corus Entertainment and China Foods 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 Corus Entertainment with a short position of China Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corus Entertainment and China Foods.

Diversification Opportunities for Corus Entertainment and China Foods

-0.37

Correlation Coefficient

Corus Entertainment  China Foods

Very good diversification

The 3 months correlation between Corus and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Corus Entertainment and China Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Foods and Corus Entertainment 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 Corus Entertainment are associated (or correlated) with China Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Foods has no effect on the direction of Corus Entertainment i.e., Corus Entertainment and China Foods go up and down completely randomly.

Pair Corralation between Corus Entertainment and China Foods

Assuming the 90 days trading horizon Corus Entertainment is expected to under-perform the China Foods. In addition to that, Corus Entertainment is 5.73 times more volatile than China Foods Ltd. It trades about -0.12 of its total potential returns per unit of risk. China Foods Ltd is currently generating about 0.22 per unit of volatility. If you would invest  722.00  in China Foods Ltd on January 25, 2024 and sell it today you would earn a total of  43.00  from holding China Foods Ltd or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Corus Entertainment  vs.  China Foods Ltd

Corus Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corus Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

China Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Foods Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, China Foods may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Corus Entertainment and China Foods

The main advantage of trading using opposite Corus Entertainment and China Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corus Entertainment position performs unexpectedly, China Foods 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 Foods will offset losses from the drop in China Foods' long position.

The idea behind Corus Entertainment and China Foods Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.