Correlation Between Full Truck and China Resources

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

By analyzing existing cross correlation between Full Truck Alliance and China Resources Power, you can compare the effects of market volatilities on Full Truck 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 Full Truck with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Full Truck and China Resources.

Diversification Opportunities for Full Truck and China Resources

0.0

Correlation Coefficient

Full Truck  China Resources

Pay attention - limited upside

The 3 months correlation between Full and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Full Truck 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 Full Truck Alliance 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 Power has no effect on the direction of Full Truck i.e., Full Truck and China Resources go up and down completely randomly.

Pair Corralation between Full Truck and China Resources

If you would invest  1,007  in Full Truck Alliance on October 1, 2024 and sell it today you would earn a total of  90.00  from holding Full Truck Alliance or generate 8.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Full Truck Alliance  vs.  China Resources Power

Full Truck Alliance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Full Truck displayed solid returns over the last few months and may actually be approaching a breakup point.

China Resources Power

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Full Truck and China Resources

The main advantage of trading using opposite Full Truck and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full Truck 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.

The idea behind Full Truck Alliance and China Resources Power 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.