Correlation Between China Resources and Crown Castle

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

Diversification Opportunities for China Resources and Crown Castle

0.71

Correlation Coefficient

China Resources  Crown Castle

Poor diversification

The 3 months correlation between China and Crown is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Crown Castle International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle Interna 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 Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle Interna has no effect on the direction of China Resources i.e., China Resources and Crown Castle go up and down completely randomly.

Pair Corralation between China Resources and Crown Castle

Assuming the 90 days horizon China Resources is expected to generate 1.23 times less return on investment than Crown Castle. In addition to that, China Resources is 1.26 times more volatile than Crown Castle International. It trades about 0.05 of its total potential returns per unit of risk. Crown Castle International is currently generating about 0.07 per unit of volatility. If you would invest  8,583  in Crown Castle International on December 20, 2024 and sell it today you would earn a total of  754.00  from holding Crown Castle International or generate 8.78% return on investment over 90 days.

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

China Resources Beer  vs.  Crown Castle International

China Resources Beer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Crown Castle Interna

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Castle International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Crown Castle may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Resources and Crown Castle

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

The idea behind China Resources Beer and Crown Castle International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.