Correlation Between Tonghua Grape and Beijing Cisri

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

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

Diversification Opportunities for Tonghua Grape and Beijing Cisri

0.47

Correlation Coefficient

Tonghua Grape  Beijing Cisri

Very weak diversification

The 3 months correlation between Tonghua and Beijing is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tonghua Grape Wine 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 Tonghua Grape 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 Tonghua Grape Wine 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 Tonghua Grape i.e., Tonghua Grape and Beijing Cisri go up and down completely randomly.

Pair Corralation between Tonghua Grape and Beijing Cisri

Assuming the 90 days trading horizon Tonghua Grape Wine is expected to under-perform the Beijing Cisri. But the stock apears to be less risky and, when comparing its historical volatility, Tonghua Grape Wine is 1.01 times less risky than Beijing Cisri. The stock trades about -0.08 of its potential returns per unit of risk. The Beijing Cisri Gaona is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,584  in Beijing Cisri Gaona on December 26, 2024 and sell it today you would earn a total of  125.00  from holding Beijing Cisri Gaona or generate 7.89% return on investment over 90 days.

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

Tonghua Grape Wine  vs.  Beijing Cisri Gaona

Tonghua Grape Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tonghua Grape Wine 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Cisri Gaona are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Cisri may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tonghua Grape and Beijing Cisri

The main advantage of trading using opposite Tonghua Grape and Beijing Cisri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tonghua Grape 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 Tonghua Grape Wine 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.