Correlation Between Tsingtao Brewery and Element Solutions

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Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and Element Solutions 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 Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and Element Solutions, you can compare the effects of market volatilities on Tsingtao Brewery and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and Element Solutions.

Diversification Opportunities for Tsingtao Brewery and Element Solutions

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Tsingtao and Element is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and Element Solutions go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and Element Solutions

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.28 times more return on investment than Element Solutions. However, Tsingtao Brewery is 1.28 times more volatile than Element Solutions. It trades about 0.24 of its potential returns per unit of risk. Element Solutions is currently generating about -0.09 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  66.00  from holding Tsingtao Brewery or generate 11.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tsingtao Brewery  vs.  Element Solutions

 Performance 
       Timeline  
Tsingtao Brewery 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Tsingtao Brewery exhibited solid returns over the last few months and may actually be approaching a breakup point.
Element Solutions 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Element Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Element Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tsingtao Brewery and Element Solutions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tsingtao Brewery and Element Solutions

The main advantage of trading using opposite Tsingtao Brewery and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.
The idea behind Tsingtao Brewery and Element Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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