Correlation Between China Resources and ADRIATIC METALS

Can any of the company-specific risk be diversified away by investing in both China Resources and ADRIATIC METALS 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 ADRIATIC METALS 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 ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on China Resources and ADRIATIC METALS 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 ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and ADRIATIC METALS.

Diversification Opportunities for China Resources and ADRIATIC METALS

0.62

Correlation Coefficient

China Resources  ADRIATIC METALS

Poor diversification

The 3 months correlation between China and ADRIATIC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS 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 ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of China Resources i.e., China Resources and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between China Resources and ADRIATIC METALS

Assuming the 90 days horizon China Resources is expected to generate 2.38 times less return on investment than ADRIATIC METALS. But when comparing it to its historical volatility, China Resources Beer is 1.01 times less risky than ADRIATIC METALS. It trades about 0.08 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  159.00  in ADRIATIC METALS LS 013355 on September 4, 2024 and sell it today you would earn a total of  87.00  from holding ADRIATIC METALS LS 013355 or generate 54.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

China Resources Beer  vs.  ADRIATIC METALS LS 013355

China Resources Beer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources reported solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Resources and ADRIATIC METALS

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

The idea behind China Resources Beer and ADRIATIC METALS LS 013355 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.