Correlation Between China Resources and CAREER EDUCATION

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

Diversification Opportunities for China Resources and CAREER EDUCATION

-0.75

Correlation Coefficient

China Resources  CAREER EDUCATION

Pay attention - limited upside

The 3 months correlation between China and CAREER is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of China Resources i.e., China Resources and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between China Resources and CAREER EDUCATION

Assuming the 90 days horizon China Resources Beer is expected to under-perform the CAREER EDUCATION. In addition to that, China Resources is 1.25 times more volatile than CAREER EDUCATION. It trades about -0.06 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.21 per unit of volatility. If you would invest  1,950  in CAREER EDUCATION on October 24, 2024 and sell it today you would earn a total of  710.00  from holding CAREER EDUCATION or generate 36.41% return on investment over 90 days.

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

China Resources Beer  vs.  CAREER EDUCATION

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 unsteady 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.

CAREER EDUCATION

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Resources and CAREER EDUCATION

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

The idea behind China Resources Beer and CAREER EDUCATION 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.