Correlation Between Tsingtao Brewery and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Tsingtao Brewery and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and NORTHEAST UTILITIES.
Diversification Opportunities for Tsingtao Brewery and NORTHEAST UTILITIES
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tsingtao and NORTHEAST is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Tsingtao Brewery is expected to under-perform the NORTHEAST UTILITIES. In addition to that, Tsingtao Brewery is 2.51 times more volatile than NORTHEAST UTILITIES. It trades about -0.01 of its total potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.21 per unit of volatility. If you would invest 5,800 in NORTHEAST UTILITIES on September 3, 2024 and sell it today you would earn a total of 250.00 from holding NORTHEAST UTILITIES or generate 4.31% 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. NORTHEAST UTILITIES
Performance |
| Timeline |
| Tsingtao Brewery |
| NORTHEAST UTILITIES |
Tsingtao Brewery and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and NORTHEAST UTILITIES
The main advantage of trading using opposite Tsingtao Brewery and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Tsingtao Brewery vs. Siamgas And Petrochemicals | Tsingtao Brewery vs. MELIA HOTELS | Tsingtao Brewery vs. JAPAN AIRLINES | Tsingtao Brewery vs. MIRAMAR HOTEL INV |
| NORTHEAST UTILITIES vs. TOTAL GABON | NORTHEAST UTILITIES vs. Walgreens Boots Alliance | NORTHEAST UTILITIES vs. Peak Resources Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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