Correlation Between Chongqing Brewery and Beijing Yanjing
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By analyzing existing cross correlation between Chongqing Brewery Co and Beijing Yanjing Brewery, you can compare the effects of market volatilities on Chongqing Brewery and Beijing Yanjing 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 Chongqing Brewery with a short position of Beijing Yanjing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Brewery and Beijing Yanjing.
Diversification Opportunities for Chongqing Brewery and Beijing Yanjing
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Beijing is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and Beijing Yanjing Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Yanjing Brewery and Chongqing 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 Chongqing Brewery Co are associated (or correlated) with Beijing Yanjing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Yanjing Brewery has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and Beijing Yanjing go up and down completely randomly.
Pair Corralation between Chongqing Brewery and Beijing Yanjing
Assuming the 90 days trading horizon Chongqing Brewery Co is expected to generate 1.23 times more return on investment than Beijing Yanjing. However, Chongqing Brewery is 1.23 times more volatile than Beijing Yanjing Brewery. It trades about 0.13 of its potential returns per unit of risk. Beijing Yanjing Brewery is currently generating about 0.09 per unit of risk. If you would invest 5,287 in Chongqing Brewery Co on September 12, 2024 and sell it today you would earn a total of 1,155 from holding Chongqing Brewery Co or generate 21.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Chongqing Brewery Co vs. Beijing Yanjing Brewery
Performance |
Timeline |
Chongqing Brewery |
Beijing Yanjing Brewery |
Chongqing Brewery and Beijing Yanjing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chongqing Brewery and Beijing Yanjing
The main advantage of trading using opposite Chongqing Brewery and Beijing Yanjing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Brewery position performs unexpectedly, Beijing Yanjing 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 Beijing Yanjing will offset losses from the drop in Beijing Yanjing's long position.Chongqing Brewery vs. China Petroleum Chemical | Chongqing Brewery vs. PetroChina Co Ltd | Chongqing Brewery vs. China State Construction | Chongqing Brewery vs. China Railway Group |
Beijing Yanjing vs. China Petroleum Chemical | Beijing Yanjing vs. PetroChina Co Ltd | Beijing Yanjing vs. China State Construction | Beijing Yanjing vs. China Railway Group |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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