Correlation Between Jiangsu Expressway and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Jiangsu Expressway 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 Jiangsu Expressway and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangsu Expressway Co and Tsingtao Brewery Co, you can compare the effects of market volatilities on Jiangsu Expressway 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 Jiangsu Expressway with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Expressway and Tsingtao Brewery.
Diversification Opportunities for Jiangsu Expressway and Tsingtao Brewery
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jiangsu and Tsingtao is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Expressway Co and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Jiangsu Expressway 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 Jiangsu Expressway Co 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 Jiangsu Expressway i.e., Jiangsu Expressway and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Jiangsu Expressway and Tsingtao Brewery
Assuming the 90 days horizon Jiangsu Expressway Co is expected to under-perform the Tsingtao Brewery. But the pink sheet apears to be less risky and, when comparing its historical volatility, Jiangsu Expressway Co is 1.54 times less risky than Tsingtao Brewery. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Tsingtao Brewery Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,282 in Tsingtao Brewery Co on August 24, 2024 and sell it today you would earn a total of 38.00 from holding Tsingtao Brewery Co or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangsu Expressway Co vs. Tsingtao Brewery Co
Performance |
| Timeline |
| Jiangsu Expressway |
| Tsingtao Brewery |
Jiangsu Expressway and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangsu Expressway and Tsingtao Brewery
The main advantage of trading using opposite Jiangsu Expressway and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Expressway 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.| Jiangsu Expressway vs. Verra Mobility Corp | Jiangsu Expressway vs. Fossil Group | Jiangsu Expressway vs. Lindblad Expeditions Holdings | Jiangsu Expressway vs. Canlan Ice Sports |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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