Correlation Between Aluminumof China and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Anheuser Busch 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 Aluminumof China and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Anheuser Busch Inbev, you can compare the effects of market volatilities on Aluminumof China and Anheuser Busch 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 Aluminumof China with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Anheuser Busch.
Diversification Opportunities for Aluminumof China and Anheuser Busch
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aluminumof and Anheuser is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Aluminumof China 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 Aluminum of are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Aluminumof China i.e., Aluminumof China and Anheuser Busch go up and down completely randomly.
Pair Corralation between Aluminumof China and Anheuser Busch
Assuming the 90 days horizon Aluminum of is expected to generate 3.78 times more return on investment than Anheuser Busch. However, Aluminumof China is 3.78 times more volatile than Anheuser Busch Inbev. It trades about 0.06 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.08 per unit of risk. If you would invest 45.00 in Aluminum of on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Aluminum of or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.5% |
| Values | Daily Returns |
Aluminum of vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Aluminumof China |
| Anheuser Busch Inbev |
Aluminumof China and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Anheuser Busch
The main advantage of trading using opposite Aluminumof China and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.| Aluminumof China vs. Air China Limited | Aluminumof China vs. COSCO SHIPPING Holdings | Aluminumof China vs. Zijin Mining Group | Aluminumof China vs. Bank of China |
| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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