Correlation Between China Resources and Impala Platinum

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

Diversification Opportunities for China Resources and Impala Platinum

0.3

Correlation Coefficient

China Resources  Impala Platinum

Weak diversification

The 3 months correlation between China and Impala is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of China Resources i.e., China Resources and Impala Platinum go up and down completely randomly.

Pair Corralation between China Resources and Impala Platinum

Assuming the 90 days horizon China Resources Beer is expected to generate 0.99 times more return on investment than Impala Platinum. However, China Resources Beer is 1.01 times less risky than Impala Platinum. It trades about -0.11 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.21 per unit of risk. If you would invest  352.00  in China Resources Beer on October 6, 2024 and sell it today you would lose (58.00) from holding China Resources Beer or give up 16.48% of portfolio value over 90 days.

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

China Resources Beer  vs.  Impala Platinum Holdings

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.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with China Resources and Impala Platinum

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

The idea behind China Resources Beer and Impala Platinum Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.