Correlation Between AUSTEVOLL SEAFOOD and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both AUSTEVOLL SEAFOOD and Tsingtao Brewery 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 AUSTEVOLL SEAFOOD and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUSTEVOLL SEAFOOD and Tsingtao Brewery, you can compare the effects of market volatilities on AUSTEVOLL SEAFOOD and Tsingtao Brewery 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 AUSTEVOLL SEAFOOD with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUSTEVOLL SEAFOOD and Tsingtao Brewery.
Diversification Opportunities for AUSTEVOLL SEAFOOD and Tsingtao Brewery
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUSTEVOLL and Tsingtao is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AUSTEVOLL SEAFOOD and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD are associated (or correlated) with Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of AUSTEVOLL SEAFOOD i.e., AUSTEVOLL SEAFOOD and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between AUSTEVOLL SEAFOOD and Tsingtao Brewery
Assuming the 90 days trading horizon AUSTEVOLL SEAFOOD is expected to generate 1.64 times more return on investment than Tsingtao Brewery. However, AUSTEVOLL SEAFOOD is 1.64 times more volatile than Tsingtao Brewery. It trades about 0.04 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.03 per unit of risk. If you would invest 380.00 in AUSTEVOLL SEAFOOD on September 30, 2024 and sell it today you would earn a total of 439.00 from holding AUSTEVOLL SEAFOOD or generate 115.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AUSTEVOLL SEAFOOD vs. Tsingtao Brewery
Performance |
Timeline |
AUSTEVOLL SEAFOOD |
Tsingtao Brewery |
AUSTEVOLL SEAFOOD and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AUSTEVOLL SEAFOOD and Tsingtao Brewery
The main advantage of trading using opposite AUSTEVOLL SEAFOOD and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUSTEVOLL SEAFOOD position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.The idea behind AUSTEVOLL SEAFOOD and Tsingtao Brewery 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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