Correlation Between CTP NV and Tsingtao Brewery

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

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

Diversification Opportunities for CTP NV and Tsingtao Brewery

0.12

Correlation Coefficient

CTP NV  Tsingtao Brewery

Average diversification

The 3 months correlation between CTP and Tsingtao is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV EO and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and CTP NV 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 CTP NV EO 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 CTP NV i.e., CTP NV and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between CTP NV and Tsingtao Brewery

Assuming the 90 days horizon CTP NV EO is expected to generate 0.67 times more return on investment than Tsingtao Brewery. However, CTP NV EO is 1.48 times less risky than Tsingtao Brewery. It trades about 0.01 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.03 per unit of risk. If you would invest  1,572  in CTP NV EO on October 26, 2024 and sell it today you would earn a total of  0.00  from holding CTP NV EO or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CTP NV EO  vs.  Tsingtao Brewery

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTP NV EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CTP NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tsingtao Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsingtao Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Tsingtao Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CTP NV and Tsingtao Brewery

The main advantage of trading using opposite CTP NV and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTP NV 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.

The idea behind CTP NV EO and Tsingtao Brewery 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.