Correlation Between China Resources and PEPTONIC MEDICAL

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

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

Diversification Opportunities for China Resources and PEPTONIC MEDICAL

0.0

Correlation Coefficient

China Resources  PEPTONIC MEDICAL

Pay attention - limited upside

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

Pair Corralation between China Resources and PEPTONIC MEDICAL

If you would invest  0.02  in PEPTONIC MEDICAL on October 11, 2024 and sell it today you would earn a total of  0.00  from holding PEPTONIC MEDICAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Resources Beer  vs.  PEPTONIC MEDICAL

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.

PEPTONIC MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with China Resources and PEPTONIC MEDICAL

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

The idea behind China Resources Beer and PEPTONIC MEDICAL 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.