Correlation Between China Resources and Loud Beverage

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

Diversification Opportunities for China Resources and Loud Beverage

0.0

Correlation Coefficient

China Resources  Loud Beverage

Pay attention - limited upside

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

Pair Corralation between China Resources and Loud Beverage

If you would invest  261.00  in China Resources Beer on December 19, 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	93.65%
Values	Daily Returns

China Resources Beer  vs.  Loud Beverage Group

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.

Loud Beverage Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loud Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Loud Beverage is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with China Resources and Loud Beverage

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

The idea behind China Resources Beer and Loud Beverage 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.