Correlation Between Tsingtao Brewery and Suzhou Weizhixiang
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By analyzing existing cross correlation between Tsingtao Brewery Co and Suzhou Weizhixiang Food, you can compare the effects of market volatilities on Tsingtao Brewery and Suzhou Weizhixiang 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 Tsingtao Brewery with a short position of Suzhou Weizhixiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and Suzhou Weizhixiang.
Diversification Opportunities for Tsingtao Brewery and Suzhou Weizhixiang
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tsingtao and Suzhou is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery Co and Suzhou Weizhixiang Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Weizhixiang Food and Tsingtao Brewery 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 Tsingtao Brewery Co are associated (or correlated) with Suzhou Weizhixiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Weizhixiang Food has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and Suzhou Weizhixiang go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and Suzhou Weizhixiang
Assuming the 90 days trading horizon Tsingtao Brewery Co is expected to generate 0.48 times more return on investment than Suzhou Weizhixiang. However, Tsingtao Brewery Co is 2.07 times less risky than Suzhou Weizhixiang. It trades about 0.08 of its potential returns per unit of risk. Suzhou Weizhixiang Food is currently generating about -0.23 per unit of risk. If you would invest 7,420 in Tsingtao Brewery Co on October 11, 2024 and sell it today you would earn a total of 220.00 from holding Tsingtao Brewery Co or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tsingtao Brewery Co vs. Suzhou Weizhixiang Food
Performance |
| Timeline |
| Tsingtao Brewery |
| Suzhou Weizhixiang Food |
Tsingtao Brewery and Suzhou Weizhixiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and Suzhou Weizhixiang
The main advantage of trading using opposite Tsingtao Brewery and Suzhou Weizhixiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, Suzhou Weizhixiang 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 Suzhou Weizhixiang will offset losses from the drop in Suzhou Weizhixiang's long position.The idea behind Tsingtao Brewery Co and Suzhou Weizhixiang Food 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.
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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