Correlation Between China Resources and Performance Food

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

Diversification Opportunities for China Resources and Performance Food

-0.62

Correlation Coefficient

China Resources  Performance Food

Excellent diversification

The 3 months correlation between China and Performance is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of China Resources i.e., China Resources and Performance Food go up and down completely randomly.

Pair Corralation between China Resources and Performance Food

Assuming the 90 days horizon China Resources Beer is expected to generate 1.77 times more return on investment than Performance Food. However, China Resources is 1.77 times more volatile than Performance Food Group. It trades about 0.05 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.14 per unit of risk. If you would invest  312.00  in China Resources Beer on December 23, 2024 and sell it today you would earn a total of  22.00  from holding China Resources Beer or generate 7.05% 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.  Performance Food Group

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 4 (%) 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.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with China Resources and Performance Food

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

The idea behind China Resources Beer and Performance Food Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.