Correlation Between Alliance Data and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Alliance Data 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 Alliance Data and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and Tsingtao Brewery, you can compare the effects of market volatilities on Alliance Data 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 Alliance Data with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Tsingtao Brewery.
Diversification Opportunities for Alliance Data and Tsingtao Brewery
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alliance and Tsingtao is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Alliance Data and Tsingtao Brewery
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 0.81 times more return on investment than Tsingtao Brewery. However, Alliance Data Systems is 1.23 times less risky than Tsingtao Brewery. It trades about 0.05 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.03 per unit of risk. If you would invest 3,583 in Alliance Data Systems on October 26, 2024 and sell it today you would earn a total of 2,525 from holding Alliance Data Systems or generate 70.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Data Systems vs. Tsingtao Brewery
Performance |
| Timeline |
| Alliance Data Systems |
| Tsingtao Brewery |
Alliance Data and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Tsingtao Brewery
The main advantage of trading using opposite Alliance Data and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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.| Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |