Correlation Between China Resources and UltraTech Cement

Can any of the company-specific risk be diversified away by investing in both China Resources and UltraTech Cement 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 UltraTech Cement 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 UltraTech Cement Limited, you can compare the effects of market volatilities on China Resources and UltraTech Cement 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 UltraTech Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and UltraTech Cement.

Diversification Opportunities for China Resources and UltraTech Cement

0.0

Correlation Coefficient

China Resources  UltraTech Cement

Pay attention - limited upside

The 3 months correlation between China and UltraTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Cement and UltraTech Cement Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UltraTech Cement 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 UltraTech Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UltraTech Cement has no effect on the direction of China Resources i.e., China Resources and UltraTech Cement go up and down completely randomly.

Pair Corralation between China Resources and UltraTech Cement

If you would invest  10,300  in UltraTech Cement Limited on December 4, 2024 and sell it today you would earn a total of  0.00  from holding UltraTech Cement Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

China Resources Cement  vs.  UltraTech Cement Limited

China Resources Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Resources Cement has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

UltraTech Cement

Risk-Adjusted Performance

Very Weak

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

Pair Trading with China Resources and UltraTech Cement

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

The idea behind China Resources Cement and UltraTech Cement Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.