Correlation Between Tsingtao Brewery and United Utilities
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and United 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 United 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 United Utilities Group, you can compare the effects of market volatilities on Tsingtao Brewery and United 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and United Utilities.
Diversification Opportunities for Tsingtao Brewery and United Utilities
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tsingtao and United is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and United Utilities go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and United Utilities
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 2.11 times more return on investment than United Utilities. However, Tsingtao Brewery is 2.11 times more volatile than United Utilities Group. It trades about 0.03 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of risk. If you would invest 484.00 in Tsingtao Brewery on September 3, 2024 and sell it today you would earn a total of 104.00 from holding Tsingtao Brewery or generate 21.49% 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. United Utilities Group
Performance |
| Timeline |
| Tsingtao Brewery |
| United Utilities |
Tsingtao Brewery and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and United Utilities
The main advantage of trading using opposite Tsingtao Brewery and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, United 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 United Utilities will offset losses from the drop in United Utilities' long position.| Tsingtao Brewery vs. Siamgas And Petrochemicals | Tsingtao Brewery vs. MELIA HOTELS | Tsingtao Brewery vs. JAPAN AIRLINES | Tsingtao Brewery vs. MIRAMAR HOTEL INV |
| United Utilities vs. Guangdong Investment Limited | United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities vs. Origin Agritech |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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