Correlation Between National Beverage and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both National Beverage and Tsingtao Brewery 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 National Beverage and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Tsingtao Brewery, you can compare the effects of market volatilities on National Beverage and Tsingtao Brewery 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 National Beverage with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Tsingtao Brewery.
Diversification Opportunities for National Beverage and Tsingtao Brewery
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Tsingtao is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and National Beverage 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 National Beverage Corp are associated (or correlated) with Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of National Beverage i.e., National Beverage and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between National Beverage and Tsingtao Brewery
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.67 times more return on investment than Tsingtao Brewery. However, National Beverage Corp is 1.49 times less risky than Tsingtao Brewery. It trades about 0.2 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.21 per unit of risk. If you would invest 4,180 in National Beverage Corp on August 27, 2024 and sell it today you would earn a total of 320.00 from holding National Beverage Corp or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Tsingtao Brewery
Performance |
| Timeline |
| National Beverage Corp |
| Tsingtao Brewery |
National Beverage and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Tsingtao Brewery
The main advantage of trading using opposite National Beverage and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.| National Beverage vs. FIREWEED METALS P | National Beverage vs. Kaiser Aluminum | National Beverage vs. PennyMac Mortgage Investment | National Beverage vs. Chuangs China Investments |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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