Correlation Between China Resources and ESGEN Acquisition

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

Diversification Opportunities for China Resources and ESGEN Acquisition

0.0

Correlation Coefficient

China Resources  ESGEN Acquisition

Pay attention - limited upside

The 3 months correlation between China and ESGEN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp 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 ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of China Resources i.e., China Resources and ESGEN Acquisition go up and down completely randomly.

Pair Corralation between China Resources and ESGEN Acquisition

If you would invest  261.00  in China Resources Beer on December 20, 2024 and sell it today you would earn a total of  57.00  from holding China Resources Beer or generate 21.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Resources Beer  vs.  ESGEN Acquisition Corp

China Resources Beer

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, China Resources reported solid returns over the last few months and may actually be approaching a breakup point.

ESGEN Acquisition Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with China Resources and ESGEN Acquisition

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

The idea behind China Resources Beer and ESGEN Acquisition Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.