Correlation Between China Pacific and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both China Pacific and Fortune Brands 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 Pacific and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Pacific Insurance and Fortune Brands Home, you can compare the effects of market volatilities on China Pacific and Fortune Brands 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 Pacific with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Pacific and Fortune Brands.
Diversification Opportunities for China Pacific and Fortune Brands
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Fortune is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding China Pacific Insurance and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and China Pacific 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 Pacific Insurance are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of China Pacific i.e., China Pacific and Fortune Brands go up and down completely randomly.
Pair Corralation between China Pacific and Fortune Brands
Assuming the 90 days trading horizon China Pacific Insurance is expected to generate 0.04 times more return on investment than Fortune Brands. However, China Pacific Insurance is 25.64 times less risky than Fortune Brands. It trades about 0.12 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.07 per unit of risk. If you would invest 2,420 in China Pacific Insurance on September 13, 2025 and sell it today you would earn a total of 20.00 from holding China Pacific Insurance or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 87.5% |
| Values | Daily Returns |
China Pacific Insurance vs. Fortune Brands Home
Performance |
| Timeline |
| China Pacific Insurance |
| Fortune Brands Home |
China Pacific and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Pacific and Fortune Brands
The main advantage of trading using opposite China Pacific and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Pacific position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| China Pacific vs. Toyota Motor Corp | China Pacific vs. Air Products Chemicals | China Pacific vs. Synchrony Financial | China Pacific vs. Coor Service Management |
| Fortune Brands vs. China Pacific Insurance | Fortune Brands vs. Jacquet Metal Service | Fortune Brands vs. Taiwan Semiconductor Manufacturing | Fortune Brands vs. Metlen Energy Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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