Correlation Between MOLSON COORS and CHINA BANK

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

By analyzing existing cross correlation between MOLSON RS BEVERAGE and CHINA BANK ADR20, you can compare the effects of market volatilities on MOLSON COORS and CHINA BANK 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 MOLSON COORS with a short position of CHINA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON COORS and CHINA BANK.

Diversification Opportunities for MOLSON COORS and CHINA BANK

0.25

Correlation Coefficient

MOLSON COORS  CHINA BANK

Modest diversification

The 3 months correlation between MOLSON and CHINA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 and MOLSON COORS 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 MOLSON RS BEVERAGE are associated (or correlated) with CHINA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of MOLSON COORS i.e., MOLSON COORS and CHINA BANK go up and down completely randomly.

Pair Corralation between MOLSON COORS and CHINA BANK

Assuming the 90 days trading horizon MOLSON COORS is expected to generate 41.13 times less return on investment than CHINA BANK. But when comparing it to its historical volatility, MOLSON RS BEVERAGE is 1.03 times less risky than CHINA BANK. It trades about 0.0 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,194  in CHINA BANK ADR20 on October 8, 2024 and sell it today you would earn a total of  276.00  from holding CHINA BANK ADR20 or generate 23.12% return on investment over 90 days.

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

MOLSON RS BEVERAGE  vs.  CHINA BANK ADR20

MOLSON RS BEVERAGE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOLSON COORS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CHINA BANK ADR20

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA BANK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOLSON COORS and CHINA BANK

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

The idea behind MOLSON RS BEVERAGE and CHINA BANK ADR20 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.