Correlation Between Tsingtao Brewery and FOMECONMEXSAB DCV

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

By analyzing existing cross correlation between Tsingtao Brewery and FOMECONMEXSAB DCV UTS, you can compare the effects of market volatilities on Tsingtao Brewery and FOMECONMEXSAB DCV 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 Tsingtao Brewery with a short position of FOMECONMEXSAB DCV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and FOMECONMEXSAB DCV.

Diversification Opportunities for Tsingtao Brewery and FOMECONMEXSAB DCV

0.18

Correlation Coefficient

Tsingtao Brewery  FOMECONMEXSAB DCV

Average diversification

The 3 months correlation between Tsingtao and FOMECONMEXSAB is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and FOMECONMEXSAB DCV UTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOMECONMEXSAB DCV UTS and Tsingtao 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 Tsingtao Brewery are associated (or correlated) with FOMECONMEXSAB DCV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOMECONMEXSAB DCV UTS has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and FOMECONMEXSAB DCV go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and FOMECONMEXSAB DCV

Assuming the 90 days horizon Tsingtao Brewery is expected to generate 2.6 times more return on investment than FOMECONMEXSAB DCV. However, Tsingtao Brewery is 2.6 times more volatile than FOMECONMEXSAB DCV UTS. It trades about 0.25 of its potential returns per unit of risk. FOMECONMEXSAB DCV UTS is currently generating about -0.07 per unit of risk. If you would invest  565.00  in Tsingtao Brewery on September 25, 2024 and sell it today you would earn a total of  90.00  from holding Tsingtao Brewery or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tsingtao Brewery  vs.  FOMECONMEXSAB DCV UTS

Tsingtao Brewery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tsingtao Brewery reported solid returns over the last few months and may actually be approaching a breakup point.

FOMECONMEXSAB DCV UTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOMECONMEXSAB DCV UTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Tsingtao Brewery and FOMECONMEXSAB DCV

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

The idea behind Tsingtao Brewery and FOMECONMEXSAB DCV UTS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.