Correlation Between Eq Energy and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Eq Energy 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 Eq Energy and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eq Energy Drink and Tsingtao Brewery Co, you can compare the effects of market volatilities on Eq Energy 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 Eq Energy with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eq Energy and Tsingtao Brewery.
Diversification Opportunities for Eq Energy and Tsingtao Brewery
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EQLB and Tsingtao is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Eq Energy 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 Eq Energy Drink 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 Eq Energy i.e., Eq Energy and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Eq Energy and Tsingtao Brewery
Given the investment horizon of 90 days Eq Energy Drink is expected to generate 2.95 times more return on investment than Tsingtao Brewery. However, Eq Energy is 2.95 times more volatile than Tsingtao Brewery Co. It trades about 0.05 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about 0.03 per unit of risk. If you would invest 0.15 in Eq Energy Drink on August 24, 2024 and sell it today you would lose (0.01) from holding Eq Energy Drink or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eq Energy Drink vs. Tsingtao Brewery Co
Performance |
| Timeline |
| Eq Energy Drink |
| Tsingtao Brewery |
Eq Energy and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eq Energy and Tsingtao Brewery
The main advantage of trading using opposite Eq Energy and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy 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.| Eq Energy vs. Greene Concepts | Eq Energy vs. Fbec Worldwide | Eq Energy vs. National Beverage Corp | Eq Energy vs. Vita Coco |
| Tsingtao Brewery vs. Jiangsu Expressway Co | Tsingtao Brewery vs. Tsingtao Brewery | Tsingtao Brewery vs. TravelSky Technology Ltd | Tsingtao Brewery vs. Air China Ltd |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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