Correlation Between Tsingtao Brewery and American Homes
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and American Homes 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 Tsingtao Brewery and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and American Homes 4, you can compare the effects of market volatilities on Tsingtao Brewery and American Homes 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 Tsingtao Brewery with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and American Homes.
Diversification Opportunities for Tsingtao Brewery and American Homes
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tsingtao and American is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Tsingtao Brewery 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 Tsingtao Brewery are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and American Homes go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and American Homes
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.25 times more return on investment than American Homes. However, Tsingtao Brewery is 1.25 times more volatile than American Homes 4. It trades about 0.3 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.03 per unit of risk. If you would invest 587.00 in Tsingtao Brewery on September 19, 2024 and sell it today you would earn a total of 80.00 from holding Tsingtao Brewery or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tsingtao Brewery vs. American Homes 4
Performance |
| Timeline |
| Tsingtao Brewery |
| American Homes 4 |
Tsingtao Brewery and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and American Homes
The main advantage of trading using opposite Tsingtao Brewery and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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