Correlation Between McGrath RentCorp and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp 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 McGrath RentCorp and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Tsingtao Brewery Co, you can compare the effects of market volatilities on McGrath RentCorp 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 McGrath RentCorp with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Tsingtao Brewery.
Diversification Opportunities for McGrath RentCorp and Tsingtao Brewery
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between McGrath and Tsingtao is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and McGrath RentCorp 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 McGrath RentCorp 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 McGrath RentCorp i.e., McGrath RentCorp and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Tsingtao Brewery
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 1.41 times less return on investment than Tsingtao Brewery. But when comparing it to its historical volatility, McGrath RentCorp is 2.34 times less risky than Tsingtao Brewery. It trades about 0.04 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,991 in Tsingtao Brewery Co on November 9, 2024 and sell it today you would earn a total of 183.00 from holding Tsingtao Brewery Co or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.52% |
| Values | Daily Returns |
McGrath RentCorp vs. Tsingtao Brewery Co
Performance |
| Timeline |
| McGrath RentCorp |
| Tsingtao Brewery |
McGrath RentCorp and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Tsingtao Brewery
The main advantage of trading using opposite McGrath RentCorp and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp 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.| McGrath RentCorp vs. Alta Equipment Group | McGrath RentCorp vs. GATX Corporation | McGrath RentCorp vs. Mega Matrix Corp | McGrath RentCorp vs. FTAI Aviation Ltd |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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