Correlation Between Chongqing Brewery and Beijing Cisri

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

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

Diversification Opportunities for Chongqing Brewery and Beijing Cisri

0.07

Correlation Coefficient

Chongqing Brewery  Beijing Cisri

Significant diversification

The 3 months correlation between Chongqing and Beijing is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and Beijing Cisri Gaona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Cisri Gaona and Chongqing 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 Chongqing Brewery Co are associated (or correlated) with Beijing Cisri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Cisri Gaona has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and Beijing Cisri go up and down completely randomly.

Pair Corralation between Chongqing Brewery and Beijing Cisri

Assuming the 90 days trading horizon Chongqing Brewery Co is expected to generate 1.09 times more return on investment than Beijing Cisri. However, Chongqing Brewery is 1.09 times more volatile than Beijing Cisri Gaona. It trades about -0.08 of its potential returns per unit of risk. Beijing Cisri Gaona is currently generating about -0.37 per unit of risk. If you would invest  6,362  in Chongqing Brewery Co on October 8, 2024 and sell it today you would lose (190.00) from holding Chongqing Brewery Co or give up 2.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Chongqing Brewery Co  vs.  Beijing Cisri Gaona

Chongqing Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chongqing Brewery Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Beijing Cisri Gaona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Cisri Gaona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chongqing Brewery and Beijing Cisri

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

The idea behind Chongqing Brewery Co and Beijing Cisri Gaona 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.