Correlation Between China Resources and BOSTON BEER

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

Diversification Opportunities for China Resources and BOSTON BEER

0.71

Correlation Coefficient

China Resources  BOSTON BEER

Poor diversification

The 3 months correlation between China and BOSTON is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of China Resources i.e., China Resources and BOSTON BEER go up and down completely randomly.

Pair Corralation between China Resources and BOSTON BEER

Assuming the 90 days horizon China Resources Beer is expected to under-perform the BOSTON BEER. In addition to that, China Resources is 1.33 times more volatile than BOSTON BEER A . It trades about -0.1 of its total potential returns per unit of risk. BOSTON BEER A is currently generating about -0.13 per unit of volatility. If you would invest  21,020  in BOSTON BEER A on March 24, 2025 and sell it today you would lose (3,780) from holding BOSTON BEER A or give up 17.98% of portfolio value over 90 days.

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

China Resources Beer  vs.  BOSTON BEER A

China Resources Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Resources Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BOSTON BEER A

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with China Resources and BOSTON BEER

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

The idea behind China Resources Beer and BOSTON BEER A 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.