Correlation Between PACIFIC ONLINE and Tsingtao Brewery

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

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

Diversification Opportunities for PACIFIC ONLINE and Tsingtao Brewery

0.0

Correlation Coefficient

PACIFIC ONLINE  Tsingtao Brewery

Pay attention - limited upside

The 3 months correlation between PACIFIC and Tsingtao is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC ONLINE and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and PACIFIC ONLINE 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 PACIFIC ONLINE 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 PACIFIC ONLINE i.e., PACIFIC ONLINE and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between PACIFIC ONLINE and Tsingtao Brewery

If you would invest  461.00  in Tsingtao Brewery on September 14, 2024 and sell it today you would earn a total of  201.00  from holding Tsingtao Brewery or generate 43.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PACIFIC ONLINE  vs.  Tsingtao Brewery

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tsingtao Brewery

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 12 (%) 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.

Pair Trading with PACIFIC ONLINE and Tsingtao Brewery

The main advantage of trading using opposite PACIFIC ONLINE and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC ONLINE 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 PACIFIC ONLINE 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.