Correlation Between Chongqing Brewery and Mango Excellent

Can any of the company-specific risk be diversified away by investing in both Chongqing Brewery and Mango Excellent 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 Chongqing Brewery and Mango Excellent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chongqing Brewery Co and Mango Excellent Media, you can compare the effects of market volatilities on Chongqing Brewery and Mango Excellent 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 Mango Excellent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Brewery and Mango Excellent.

Diversification Opportunities for Chongqing Brewery and Mango Excellent

0.77

Correlation Coefficient

Chongqing Brewery  Mango Excellent

Poor diversification

The 3 months correlation between Chongqing and Mango is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and Mango Excellent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mango Excellent Media 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 Mango Excellent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mango Excellent Media has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and Mango Excellent go up and down completely randomly.

Pair Corralation between Chongqing Brewery and Mango Excellent

Assuming the 90 days trading horizon Chongqing Brewery Co is expected to under-perform the Mango Excellent. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Brewery Co is 1.6 times less risky than Mango Excellent. The stock trades about 0.0 of its potential returns per unit of risk. The Mango Excellent Media is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,295  in Mango Excellent Media on September 27, 2024 and sell it today you would earn a total of  522.00  from holding Mango Excellent Media or generate 22.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chongqing Brewery Co  vs.  Mango Excellent Media

Chongqing Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chongqing Brewery Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Chongqing Brewery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mango Excellent Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mango Excellent Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mango Excellent sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chongqing Brewery and Mango Excellent

The main advantage of trading using opposite Chongqing Brewery and Mango Excellent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Brewery position performs unexpectedly, Mango Excellent 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 Mango Excellent will offset losses from the drop in Mango Excellent's long position.

The idea behind Chongqing Brewery Co and Mango Excellent Media 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.