Correlation Between China Resources and PPC

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

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

Diversification Opportunities for China Resources and PPC

-0.46

Correlation Coefficient

China Resources  PPC

Very good diversification

The 3 months correlation between China and PPC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Cement and PPC Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPC Ltd ADR 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 Cement are associated (or correlated) with PPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPC Ltd ADR has no effect on the direction of China Resources i.e., China Resources and PPC go up and down completely randomly.

Pair Corralation between China Resources and PPC

If you would invest  33.00  in PPC Ltd ADR on September 15, 2024 and sell it today you would earn a total of  0.00  from holding PPC Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

China Resources Cement  vs.  PPC Ltd ADR

China Resources Cement

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Cement are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, China Resources showed solid returns over the last few months and may actually be approaching a breakup point.

PPC Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPC Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, PPC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Resources and PPC

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

The idea behind China Resources Cement and PPC Ltd ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.