Correlation Between China Resources and Cellink AB

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

Diversification Opportunities for China Resources and Cellink AB

0.8

Correlation Coefficient

China Resources  Cellink AB

Very poor diversification

The 3 months correlation between China and Cellink is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB 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 Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of China Resources i.e., China Resources and Cellink AB go up and down completely randomly.

Pair Corralation between China Resources and Cellink AB

Assuming the 90 days horizon China Resources Beer is expected to under-perform the Cellink AB. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 1.73 times less risky than Cellink AB. The stock trades about -0.11 of its potential returns per unit of risk. The Cellink AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  343.00  in Cellink AB on October 6, 2024 and sell it today you would lose (59.00) from holding Cellink AB or give up 17.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.5%
Values	Daily Returns

China Resources Beer  vs.  Cellink AB

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.

Cellink AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellink AB 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 China Resources and Cellink AB

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

The idea behind China Resources Beer and Cellink AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.