Correlation Between Eastroc Beverage and Tianjin You

Can any of the company-specific risk be diversified away by investing in both Eastroc Beverage and Tianjin You 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 Eastroc Beverage and Tianjin You into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastroc Beverage Group and Tianjin You Fa, you can compare the effects of market volatilities on Eastroc Beverage and Tianjin You 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 Eastroc Beverage with a short position of Tianjin You. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Tianjin You.

Diversification Opportunities for Eastroc Beverage and Tianjin You

0.11

Correlation Coefficient

Eastroc Beverage  Tianjin You

Average diversification

The 3 months correlation between Eastroc and Tianjin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Tianjin You Fa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin You Fa and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with Tianjin You. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin You Fa has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Tianjin You go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Tianjin You

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 1.16 times more return on investment than Tianjin You. However, Eastroc Beverage is 1.16 times more volatile than Tianjin You Fa. It trades about 0.08 of its potential returns per unit of risk. Tianjin You Fa is currently generating about 0.0 per unit of risk. If you would invest  13,596  in Eastroc Beverage Group on October 10, 2024 and sell it today you would earn a total of  12,272  from holding Eastroc Beverage Group or generate 90.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Eastroc Beverage Group  vs.  Tianjin You Fa

Eastroc Beverage

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin You Fa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianjin You Fa 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.

Pair Trading with Eastroc Beverage and Tianjin You

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

The idea behind Eastroc Beverage Group and Tianjin You Fa 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.