Correlation Between Volato and China Resources

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

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

Diversification Opportunities for Volato and China Resources

-0.74

Correlation Coefficient

Volato  China Resources

Pay attention - limited upside

The 3 months correlation between Volato and China is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Volato Group 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 Volato 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 Volato Group 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 Volato i.e., Volato and China Resources go up and down completely randomly.

Pair Corralation between Volato and China Resources

Given the investment horizon of 90 days Volato Group is expected to under-perform the China Resources. In addition to that, Volato is 3.34 times more volatile than China Resources Beer. It trades about -0.11 of its total potential returns per unit of risk. China Resources Beer is currently generating about 0.11 per unit of volatility. 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	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Volato Group  vs.  China Resources Beer

Volato Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volato Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Volato and China Resources

The main advantage of trading using opposite Volato and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volato 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 Volato Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.