Correlation Between CDN IMPERIAL and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and Tsingtao Brewery, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Tsingtao Brewery.
Diversification Opportunities for CDN IMPERIAL and Tsingtao Brewery
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CDN and Tsingtao is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Tsingtao Brewery
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.36 times more return on investment than Tsingtao Brewery. However, CDN IMPERIAL BANK is 2.81 times less risky than Tsingtao Brewery. It trades about 0.33 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.0 per unit of risk. If you would invest 5,758 in CDN IMPERIAL BANK on September 1, 2024 and sell it today you would earn a total of 361.00 from holding CDN IMPERIAL BANK or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Tsingtao Brewery
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Tsingtao Brewery |
CDN IMPERIAL and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Tsingtao Brewery
The main advantage of trading using opposite CDN IMPERIAL and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.| CDN IMPERIAL vs. Perseus Mining Limited | CDN IMPERIAL vs. ECHO INVESTMENT ZY | CDN IMPERIAL vs. LION ONE METALS | CDN IMPERIAL vs. GREENX METALS LTD |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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