Correlation Between China Resources and TTM TECHNOLOGIES

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

Diversification Opportunities for China Resources and TTM TECHNOLOGIES

-0.81

Correlation Coefficient

China Resources  TTM TECHNOLOGIES

Pay attention - limited upside

The 3 months correlation between China and TTM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and TTM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM TECHNOLOGIES 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 TTM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM TECHNOLOGIES has no effect on the direction of China Resources i.e., China Resources and TTM TECHNOLOGIES go up and down completely randomly.

Pair Corralation between China Resources and TTM TECHNOLOGIES

Assuming the 90 days horizon China Resources Beer is expected to under-perform the TTM TECHNOLOGIES. In addition to that, China Resources is 1.37 times more volatile than TTM TECHNOLOGIES . It trades about -0.26 of its total potential returns per unit of risk. TTM TECHNOLOGIES is currently generating about 0.08 per unit of volatility. If you would invest  2,300  in TTM TECHNOLOGIES on October 10, 2024 and sell it today you would earn a total of  60.00  from holding TTM TECHNOLOGIES or generate 2.61% return on investment over 90 days.

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

China Resources Beer  vs.  TTM TECHNOLOGIES

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.

TTM TECHNOLOGIES

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with China Resources and TTM TECHNOLOGIES

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

The idea behind China Resources Beer and TTM TECHNOLOGIES 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.