Correlation Between Datang HuaYin and Tsingtao Brewery
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By analyzing existing cross correlation between Datang HuaYin Electric and Tsingtao Brewery Co, you can compare the effects of market volatilities on Datang HuaYin 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 Datang HuaYin with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang HuaYin and Tsingtao Brewery.
Diversification Opportunities for Datang HuaYin and Tsingtao Brewery
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Datang and Tsingtao is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Datang HuaYin Electric and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Datang HuaYin 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 Datang HuaYin Electric 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 Datang HuaYin i.e., Datang HuaYin and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Datang HuaYin and Tsingtao Brewery
Assuming the 90 days trading horizon Datang HuaYin is expected to generate 1.4 times less return on investment than Tsingtao Brewery. But when comparing it to its historical volatility, Datang HuaYin Electric is 1.15 times less risky than Tsingtao Brewery. It trades about 0.18 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,446 in Tsingtao Brewery Co on September 14, 2024 and sell it today you would earn a total of 2,545 from holding Tsingtao Brewery Co or generate 46.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Datang HuaYin Electric vs. Tsingtao Brewery Co
Performance |
Timeline |
Datang HuaYin Electric |
Tsingtao Brewery |
Datang HuaYin and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang HuaYin and Tsingtao Brewery
The main advantage of trading using opposite Datang HuaYin and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang HuaYin 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.Datang HuaYin vs. Industrial and Commercial | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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