Correlation Between China Resources and Pruksa Holding

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

By analyzing existing cross correlation between China Resources Land and Pruksa Holding Public, you can compare the effects of market volatilities on China Resources and Pruksa Holding 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 Pruksa Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Pruksa Holding.

Diversification Opportunities for China Resources and Pruksa Holding

0.03

Correlation Coefficient

China Resources  Pruksa Holding

Significant diversification

The 3 months correlation between China and Pruksa is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and Pruksa Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pruksa Holding Public 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 Land are associated (or correlated) with Pruksa Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pruksa Holding Public has no effect on the direction of China Resources i.e., China Resources and Pruksa Holding go up and down completely randomly.

Pair Corralation between China Resources and Pruksa Holding

Assuming the 90 days horizon China Resources Land is expected to generate 1.54 times more return on investment than Pruksa Holding. However, China Resources is 1.54 times more volatile than Pruksa Holding Public. It trades about 0.05 of its potential returns per unit of risk. Pruksa Holding Public is currently generating about -0.11 per unit of risk. If you would invest  252.00  in China Resources Land on September 24, 2024 and sell it today you would earn a total of  18.00  from holding China Resources Land or generate 7.14% return on investment over 90 days.

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

China Resources Land  vs.  Pruksa Holding Public

China Resources Land

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Land are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pruksa Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pruksa Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Resources and Pruksa Holding

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

The idea behind China Resources Land and Pruksa Holding Public 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.