Correlation Between China Resources and Nomura Holdings

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

Diversification Opportunities for China Resources and Nomura Holdings

-0.68

Correlation Coefficient

China Resources  Nomura Holdings

Excellent diversification

The 3 months correlation between China and Nomura is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of China Resources i.e., China Resources and Nomura Holdings go up and down completely randomly.

Pair Corralation between China Resources and Nomura Holdings

Assuming the 90 days horizon China Resources Beer is expected to under-perform the Nomura Holdings. In addition to that, China Resources is 1.84 times more volatile than Nomura Holdings. It trades about -0.11 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.19 per unit of volatility. If you would invest  548.00  in Nomura Holdings on October 22, 2024 and sell it today you would earn a total of  24.00  from holding Nomura Holdings or generate 4.38% 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.  Nomura 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.

Nomura Holdings

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with China Resources and Nomura Holdings

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

The idea behind China Resources Beer and Nomura 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.