Correlation Between Changchun Faway and Tsingtao Brewery
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By analyzing existing cross correlation between Changchun Faway Automobile and Tsingtao Brewery Co, you can compare the effects of market volatilities on Changchun Faway 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 Changchun Faway with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun Faway and Tsingtao Brewery.
Diversification Opportunities for Changchun Faway and Tsingtao Brewery
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Changchun and Tsingtao is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Changchun Faway Automobile and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Changchun Faway 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 Changchun Faway Automobile 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 Changchun Faway i.e., Changchun Faway and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Changchun Faway and Tsingtao Brewery
Assuming the 90 days trading horizon Changchun Faway is expected to generate 1.16 times less return on investment than Tsingtao Brewery. But when comparing it to its historical volatility, Changchun Faway Automobile is 1.33 times less risky than Tsingtao Brewery. It trades about 0.2 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,548 in Tsingtao Brewery Co on September 12, 2024 and sell it today you would earn a total of 1,872 from holding Tsingtao Brewery Co or generate 33.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Changchun Faway Automobile vs. Tsingtao Brewery Co
Performance |
Timeline |
Changchun Faway Auto |
Tsingtao Brewery |
Changchun Faway and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Changchun Faway and Tsingtao Brewery
The main advantage of trading using opposite Changchun Faway and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun Faway 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.Changchun Faway vs. Lutian Machinery Co | Changchun Faway vs. PetroChina Co Ltd | Changchun Faway vs. Bank of China | Changchun Faway vs. Gansu Jiu Steel |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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