Correlation Between ALEFARM BREWING and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and Tianjin Capital 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 ALEFARM BREWING and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and Tianjin Capital Environmental, you can compare the effects of market volatilities on ALEFARM BREWING and Tianjin Capital 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 ALEFARM BREWING with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and Tianjin Capital.
Diversification Opportunities for ALEFARM BREWING and Tianjin Capital
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ALEFARM and Tianjin is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and Tianjin Capital go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and Tianjin Capital
Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to generate 2.01 times more return on investment than Tianjin Capital. However, ALEFARM BREWING is 2.01 times more volatile than Tianjin Capital Environmental. It trades about 0.03 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.04 per unit of risk. If you would invest 16.00 in ALEFARM BREWING DK 05 on October 26, 2024 and sell it today you would earn a total of 1.00 from holding ALEFARM BREWING DK 05 or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. Tianjin Capital Environmental
Performance |
| Timeline |
| ALEFARM BREWING DK |
| Tianjin Capital Envi |
ALEFARM BREWING and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and Tianjin Capital
The main advantage of trading using opposite ALEFARM BREWING and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.| ALEFARM BREWING vs. Fomento Econmico Mexicano | ALEFARM BREWING vs. BUDWEISER BREWUNSPADR4 | ALEFARM BREWING vs. China Resources Beer | ALEFARM BREWING vs. Molson Coors Brewing |
| Tianjin Capital vs. TITAN MACHINERY | Tianjin Capital vs. Daito Trust Construction | Tianjin Capital vs. ALEFARM BREWING DK 05 | Tianjin Capital vs. Flutter Entertainment PLC |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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