Correlation Between Centrica Plc and China Resources
Can any of the company-specific risk be diversified away by investing in both Centrica Plc 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 Centrica Plc and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrica plc and China Resources Power, you can compare the effects of market volatilities on Centrica Plc 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 Centrica Plc with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrica Plc and China Resources.
Diversification Opportunities for Centrica Plc and China Resources
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centrica and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Centrica plc and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Centrica Plc 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 Centrica plc 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 Power has no effect on the direction of Centrica Plc i.e., Centrica Plc and China Resources go up and down completely randomly.
Pair Corralation between Centrica Plc and China Resources
If you would invest 157.00 in Centrica plc on February 4, 2024 and sell it today you would earn a total of 27.00 from holding Centrica plc or generate 17.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
Centrica plc vs. China Resources Power
Performance |
Timeline |
Centrica plc |
China Resources Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Centrica Plc and China Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Centrica Plc and China Resources
The main advantage of trading using opposite Centrica Plc and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrica Plc 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.Centrica Plc vs. NRG Energy | Centrica Plc vs. TransAlta Corp | Centrica Plc vs. Kenon Holdings | Centrica Plc vs. Pampa Energia SA |
China Resources vs. Casio Computer Co | China Resources vs. Radcom | China Resources vs. Pinduoduo | China Resources vs. Anterix |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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