Correlation Between BANK CENTRAL and Tsingtao Brewery

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

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

Diversification Opportunities for BANK CENTRAL and Tsingtao Brewery

-0.21

Correlation Coefficient

BANK CENTRAL  Tsingtao Brewery

Very good diversification

The 3 months correlation between BANK and Tsingtao is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and BANK CENTRAL 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 BANK CENTRAL ASIA 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 BANK CENTRAL i.e., BANK CENTRAL and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between BANK CENTRAL and Tsingtao Brewery

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the Tsingtao Brewery. But the stock apears to be less risky and, when comparing its historical volatility, BANK CENTRAL ASIA is 1.44 times less risky than Tsingtao Brewery. The stock trades about -0.2 of its potential returns per unit of risk. The Tsingtao Brewery is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Tsingtao Brewery on December 30, 2024 and sell it today you would lose (28.00) from holding Tsingtao Brewery or give up 4.15% of portfolio value over 90 days.

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

BANK CENTRAL ASIA  vs.  Tsingtao Brewery

BANK CENTRAL ASIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK CENTRAL ASIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tsingtao Brewery

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BANK CENTRAL and Tsingtao Brewery

The main advantage of trading using opposite BANK CENTRAL and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL 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 BANK CENTRAL ASIA 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 CEOs Directory module to screen CEOs from public companies around the world.