Correlation Between China Resources and Seino Holdings

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

Diversification Opportunities for China Resources and Seino Holdings

-0.34

Correlation Coefficient

China Resources  Seino Holdings

Very good diversification

The 3 months correlation between China and Seino is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Seino Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seino Holdings 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 Seino Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seino Holdings has no effect on the direction of China Resources i.e., China Resources and Seino Holdings go up and down completely randomly.

Pair Corralation between China Resources and Seino Holdings

Assuming the 90 days horizon China Resources Beer is expected to under-perform the Seino Holdings. In addition to that, China Resources is 3.46 times more volatile than Seino Holdings Co. It trades about -0.03 of its total potential returns per unit of risk. Seino Holdings Co is currently generating about 0.0 per unit of volatility. If you would invest  1,450  in Seino Holdings Co on September 27, 2024 and sell it today you would lose (10.00) from holding Seino Holdings Co or give up 0.69% of portfolio value over 90 days.

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

China Resources Beer  vs.  Seino Holdings Co

China Resources Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Resources Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Seino Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seino Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seino Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Resources and Seino Holdings

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

The idea behind China Resources Beer and Seino Holdings Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.