Correlation Between Flow Beverage and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Flow Beverage 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 Flow Beverage and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Beverage Corp and Tsingtao Brewery Co, you can compare the effects of market volatilities on Flow Beverage 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 Flow Beverage with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Beverage and Tsingtao Brewery.
Diversification Opportunities for Flow Beverage and Tsingtao Brewery
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flow and Tsingtao is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Flow Beverage Corp and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Flow Beverage 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 Flow Beverage Corp 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 Flow Beverage i.e., Flow Beverage and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Flow Beverage and Tsingtao Brewery
Assuming the 90 days horizon Flow Beverage Corp is expected to under-perform the Tsingtao Brewery. In addition to that, Flow Beverage is 1.36 times more volatile than Tsingtao Brewery Co. It trades about -0.17 of its total potential returns per unit of risk. Tsingtao Brewery Co is currently generating about -0.16 per unit of volatility. If you would invest 3,599 in Tsingtao Brewery Co on August 27, 2024 and sell it today you would lose (599.00) from holding Tsingtao Brewery Co or give up 16.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flow Beverage Corp vs. Tsingtao Brewery Co
Performance |
| Timeline |
| Flow Beverage Corp |
| Tsingtao Brewery |
Flow Beverage and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Beverage and Tsingtao Brewery
The main advantage of trading using opposite Flow Beverage and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Beverage 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.| Flow Beverage vs. National Beverage Corp | Flow Beverage vs. Vita Coco | Flow Beverage vs. Hill Street Beverage | Flow Beverage vs. Alkame Holdings |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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