Correlation Between China Resources and Intel

Can any of the company-specific risk be diversified away by investing in both China Resources and Intel 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 Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Resources Land and Intel, you can compare the effects of market volatilities on China Resources and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Intel.

Diversification Opportunities for China Resources and Intel

0.39

Correlation Coefficient

China Resources  Intel

Weak diversification

The 3 months correlation between China and Intel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Land are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of China Resources i.e., China Resources and Intel go up and down completely randomly.

Pair Corralation between China Resources and Intel

Assuming the 90 days horizon China Resources Land is expected to generate 1.45 times more return on investment than Intel. However, China Resources is 1.45 times more volatile than Intel. It trades about 0.07 of its potential returns per unit of risk. Intel is currently generating about -0.06 per unit of risk. If you would invest  153.00  in China Resources Land on October 22, 2024 and sell it today you would earn a total of  129.00  from holding China Resources Land or generate 84.31% return on investment over 90 days.

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

China Resources Land  vs.  Intel

China Resources Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Resources and Intel

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

The idea behind China Resources Land and Intel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.