Correlation Between MOLSON RS and China Resources

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

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

Diversification Opportunities for MOLSON RS and China Resources

-0.49

Correlation Coefficient

MOLSON RS  China Resources

Very good diversification

The 3 months correlation between MOLSON and China is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS CDA and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and MOLSON RS 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 MOLSON RS CDA 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 Beer has no effect on the direction of MOLSON RS i.e., MOLSON RS and China Resources go up and down completely randomly.

Pair Corralation between MOLSON RS and China Resources

Assuming the 90 days horizon MOLSON RS CDA is expected to generate 0.61 times more return on investment than China Resources. However, MOLSON RS CDA is 1.65 times less risky than China Resources. It trades about 0.03 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest  4,426  in MOLSON RS CDA on September 23, 2024 and sell it today you would earn a total of  1,174  from holding MOLSON RS CDA or generate 26.53% return on investment over 90 days.

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

MOLSON RS CDA  vs.  China Resources Beer

MOLSON RS CDA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS CDA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOLSON RS reported solid returns over the last few months and may actually be approaching a breakup point.

China Resources Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 5 (%) 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.

Pair Trading with MOLSON RS and China Resources

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

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.