Correlation Between Ebro Foods and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods SA and Tsingtao Brewery, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Tsingtao Brewery.
Diversification Opportunities for Ebro Foods and Tsingtao Brewery
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Tsingtao is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Ebro Foods 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 Ebro Foods SA 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 Ebro Foods i.e., Ebro Foods and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Ebro Foods and Tsingtao Brewery
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.72 times more return on investment than Tsingtao Brewery. However, Ebro Foods SA is 1.4 times less risky than Tsingtao Brewery. It trades about 0.12 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.46 per unit of risk. If you would invest 1,572 in Ebro Foods SA on November 3, 2024 and sell it today you would earn a total of 44.00 from holding Ebro Foods SA or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. Tsingtao Brewery
Performance |
| Timeline |
| Ebro Foods SA |
| Tsingtao Brewery |
Ebro Foods and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Tsingtao Brewery
The main advantage of trading using opposite Ebro Foods and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. BioNTech SE | Ebro Foods vs. Harmony Gold Mining | Ebro Foods vs. Sunny Optical Technology | Ebro Foods vs. Allegheny Technologies Incorporated |
| Tsingtao Brewery vs. Nomad Foods | Tsingtao Brewery vs. TYSON FOODS A | Tsingtao Brewery vs. MGIC INVESTMENT | Tsingtao Brewery vs. PLANT VEDA FOODS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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