Correlation Between Elis SA and China Resources

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

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

Diversification Opportunities for Elis SA and China Resources

0.33

Correlation Coefficient

Elis SA  China Resources

Weak diversification

The 3 months correlation between Elis and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA 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 Elis SA 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 Elis SA 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 Elis SA i.e., Elis SA and China Resources go up and down completely randomly.

Pair Corralation between Elis SA and China Resources

Assuming the 90 days horizon Elis SA is expected to generate 0.52 times more return on investment than China Resources. However, Elis SA is 1.93 times less risky than China Resources. It trades about -0.27 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.19 per unit of risk. If you would invest  2,188  in Elis SA on October 9, 2024 and sell it today you would lose (327.00) from holding Elis SA or give up 14.95% of portfolio value over 90 days.

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

Elis SA  vs.  China Resources Beer

Elis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elis SA 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.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Elis SA and China Resources

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

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.