Correlation Between Eastroc Beverage and Shantou Wanshun

Can any of the company-specific risk be diversified away by investing in both Eastroc Beverage and Shantou Wanshun 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 Eastroc Beverage and Shantou Wanshun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastroc Beverage Group and Shantou Wanshun Package, you can compare the effects of market volatilities on Eastroc Beverage and Shantou Wanshun 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 Eastroc Beverage with a short position of Shantou Wanshun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Shantou Wanshun.

Diversification Opportunities for Eastroc Beverage and Shantou Wanshun

0.95

Correlation Coefficient

Eastroc Beverage  Shantou Wanshun

Almost no diversification

The 3 months correlation between Eastroc and Shantou is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Shantou Wanshun Package in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantou Wanshun Package and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with Shantou Wanshun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantou Wanshun Package has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Shantou Wanshun go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Shantou Wanshun

Assuming the 90 days trading horizon Eastroc Beverage is expected to generate 1.98 times less return on investment than Shantou Wanshun. But when comparing it to its historical volatility, Eastroc Beverage Group is 2.04 times less risky than Shantou Wanshun. It trades about 0.13 of its potential returns per unit of risk. Shantou Wanshun Package is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  417.00  in Shantou Wanshun Package on September 2, 2024 and sell it today you would earn a total of  142.00  from holding Shantou Wanshun Package or generate 34.05% return on investment over 90 days.

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

Eastroc Beverage Group  vs.  Shantou Wanshun Package

Eastroc Beverage

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Shantou Wanshun Package

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shantou Wanshun Package are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shantou Wanshun sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastroc Beverage and Shantou Wanshun

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

The idea behind Eastroc Beverage Group and Shantou Wanshun Package 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 CEOs Directory module to screen CEOs from public companies around the world.