Correlation Between Tsingtao Brewery and COMINTL BANK
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and COMINTL BANK 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 COMINTL BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and COMINTL BANK ADR1, you can compare the effects of market volatilities on Tsingtao Brewery and COMINTL BANK 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 COMINTL BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and COMINTL BANK.
Diversification Opportunities for Tsingtao Brewery and COMINTL BANK
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tsingtao and COMINTL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and COMINTL BANK ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMINTL BANK ADR1 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 COMINTL BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMINTL BANK ADR1 has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and COMINTL BANK go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and COMINTL BANK
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.14 times more return on investment than COMINTL BANK. However, Tsingtao Brewery is 1.14 times more volatile than COMINTL BANK ADR1. It trades about 0.33 of its potential returns per unit of risk. COMINTL BANK ADR1 is currently generating about 0.09 per unit of risk. If you would invest 577.00 in Tsingtao Brewery on September 26, 2024 and sell it today you would earn a total of 83.00 from holding Tsingtao Brewery or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tsingtao Brewery vs. COMINTL BANK ADR1
Performance |
| Timeline |
| Tsingtao Brewery |
| COMINTL BANK ADR1 |
Tsingtao Brewery and COMINTL BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and COMINTL BANK
The main advantage of trading using opposite Tsingtao Brewery and COMINTL BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, COMINTL BANK 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 COMINTL BANK will offset losses from the drop in COMINTL BANK's long position.| Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Microsoft | Tsingtao Brewery vs. Microsoft |
| COMINTL BANK vs. BNP Paribas SA | COMINTL BANK vs. DNB BANK ASA | COMINTL BANK vs. Deutsche Bank Aktiengesellschaft | COMINTL BANK vs. Socit Gnrale Socit |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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