Correlation Between China National and Tsingtao Brewery
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By analyzing existing cross correlation between China National Software and Tsingtao Brewery Co, you can compare the effects of market volatilities on China National 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 China National with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China National and Tsingtao Brewery.
Diversification Opportunities for China National and Tsingtao Brewery
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Tsingtao is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China National Software and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and China National 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 National Software 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 China National i.e., China National and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between China National and Tsingtao Brewery
Assuming the 90 days trading horizon China National Software is expected to generate 1.43 times more return on investment than Tsingtao Brewery. However, China National is 1.43 times more volatile than Tsingtao Brewery Co. It trades about 0.14 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about -0.04 per unit of risk. If you would invest 3,027 in China National Software on September 3, 2024 and sell it today you would earn a total of 2,519 from holding China National Software or generate 83.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China National Software vs. Tsingtao Brewery Co
Performance |
| Timeline |
| China National Software |
| Tsingtao Brewery |
China National and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China National and Tsingtao Brewery
The main advantage of trading using opposite China National and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China National 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.| China National vs. Shandong Hi Speed RoadBridge | China National vs. Huatian Hotel Group | China National vs. Jiangsu Broadcasting Cable | China National vs. Glodon Software Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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