Correlation Between Tsingtao Brewery and TREECOM
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and TREECOM 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 TREECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and TREECOM, you can compare the effects of market volatilities on Tsingtao Brewery and TREECOM 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 TREECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and TREECOM.
Diversification Opportunities for Tsingtao Brewery and TREECOM
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tsingtao and TREECOM is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and TREECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TREECOM 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 TREECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TREECOM has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and TREECOM go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and TREECOM
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.75 times less return on investment than TREECOM. But when comparing it to its historical volatility, Tsingtao Brewery is 1.1 times less risky than TREECOM. It trades about 0.06 of its potential returns per unit of risk. TREECOM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,510 in TREECOM on September 14, 2024 and sell it today you would earn a total of 2,379 from holding TREECOM or generate 157.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Tsingtao Brewery vs. TREECOM
Performance |
| Timeline |
| Tsingtao Brewery |
| TREECOM |
Tsingtao Brewery and TREECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and TREECOM
The main advantage of trading using opposite Tsingtao Brewery and TREECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, TREECOM 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 TREECOM will offset losses from the drop in TREECOM's long position.| Tsingtao Brewery vs. Lendlease Group | Tsingtao Brewery vs. PLAY2CHILL SA ZY | Tsingtao Brewery vs. BOSTON BEER A | Tsingtao Brewery vs. FUYO GENERAL LEASE |
| TREECOM vs. H FARM SPA | TREECOM vs. PLAYSTUDIOS A DL 0001 | TREECOM vs. Tencent Music Entertainment | TREECOM vs. ZINC MEDIA GR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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