Correlation Between HF SINCLAIR and China Resources

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

By analyzing existing cross correlation between HF SINCLAIR P and China Resources Beer, you can compare the effects of market volatilities on HF SINCLAIR and China Resources 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 HF SINCLAIR with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF SINCLAIR and China Resources.

Diversification Opportunities for HF SINCLAIR and China Resources

-0.26

Correlation Coefficient

HF SINCLAIR  China Resources

Very good diversification

The 3 months correlation between HL80 and China is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and HF SINCLAIR 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 HF SINCLAIR P are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of HF SINCLAIR i.e., HF SINCLAIR and China Resources go up and down completely randomly.

Pair Corralation between HF SINCLAIR and China Resources

Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, HF SINCLAIR P is 2.12 times less risky than China Resources. The stock trades about -0.03 of its potential returns per unit of risk. The China Resources Beer is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  266.00  in China Resources Beer on September 5, 2024 and sell it today you would earn a total of  46.00  from holding China Resources Beer or generate 17.29% return on investment over 90 days.

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

HF SINCLAIR P  vs.  China Resources Beer

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF SINCLAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Resources Beer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF SINCLAIR and China Resources

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

The idea behind HF SINCLAIR P and China Resources Beer 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.