Correlation Between Boston Beer and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Tsingtao Brewery, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Tsingtao Brewery.
Diversification Opportunities for Boston Beer and Tsingtao Brewery
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Tsingtao is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Boston Beer and Tsingtao Brewery
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.52 times more return on investment than Tsingtao Brewery. However, The Boston Beer is 1.9 times less risky than Tsingtao Brewery. It trades about 0.12 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.05 per unit of risk. If you would invest 25,480 in The Boston Beer on October 4, 2024 and sell it today you would earn a total of 2,880 from holding The Boston Beer or generate 11.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Boston Beer vs. Tsingtao Brewery
Performance |
Timeline |
Boston Beer |
Tsingtao Brewery |
Boston Beer and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Beer and Tsingtao Brewery
The main advantage of trading using opposite Boston Beer and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.Boston Beer vs. Spirent Communications plc | Boston Beer vs. Chesapeake Utilities | Boston Beer vs. Waste Management | Boston Beer vs. UNITED UTILITIES GR |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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