Correlation Between Fortescue Metals and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Tsingtao Brewery, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Tsingtao Brewery.
Diversification Opportunities for Fortescue Metals and Tsingtao Brewery
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortescue and Tsingtao is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Fortescue Metals and Tsingtao Brewery
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 1.28 times more return on investment than Tsingtao Brewery. However, Fortescue Metals is 1.28 times more volatile than Tsingtao Brewery. It trades about 0.09 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.35 per unit of risk. If you would invest 1,106 in Fortescue Metals Group on October 28, 2024 and sell it today you would earn a total of 33.00 from holding Fortescue Metals Group or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Tsingtao Brewery
Performance |
| Timeline |
| Fortescue Metals |
| Tsingtao Brewery |
Fortescue Metals and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Tsingtao Brewery
The main advantage of trading using opposite Fortescue Metals and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. BJs Wholesale Club | Fortescue Metals vs. PICKN PAY STORES | Fortescue Metals vs. Darden Restaurants | Fortescue Metals vs. Casio Computer CoLtd |
| Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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