Correlation Between BOSTON BEER and Chuangs China
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Chuangs China 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 BOSTON BEER and Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOSTON BEER A and Chuangs China Investments, you can compare the effects of market volatilities on BOSTON BEER and Chuangs China 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 BOSTON BEER with a short position of Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Chuangs China.
Diversification Opportunities for BOSTON BEER and Chuangs China
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between BOSTON and Chuangs is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Chuangs China go up and down completely randomly.
Pair Corralation between BOSTON BEER and Chuangs China
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 1.33 times more return on investment than Chuangs China. However, BOSTON BEER is 1.33 times more volatile than Chuangs China Investments. It trades about 0.03 of its potential returns per unit of risk. Chuangs China Investments is currently generating about 0.01 per unit of risk. If you would invest 27,100 in BOSTON BEER A on September 3, 2024 and sell it today you would earn a total of 1,880 from holding BOSTON BEER A or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Chuangs China Investments
Performance |
| Timeline |
| BOSTON BEER A |
| Chuangs China Investments |
BOSTON BEER and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Chuangs China
The main advantage of trading using opposite BOSTON BEER and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| BOSTON BEER vs. China Resources Beer | BOSTON BEER vs. Tsingtao Brewery | BOSTON BEER vs. Molson Coors Beverage | BOSTON BEER vs. United Breweries Co |
| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
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 Stocks Directory module to find actively traded stocks across global markets.
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