Correlation Between GOLD ROAD and Tsingtao Brewery

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

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

Diversification Opportunities for GOLD ROAD and Tsingtao Brewery

-0.09

Correlation Coefficient

GOLD ROAD  Tsingtao Brewery

Good diversification

The 3 months correlation between GOLD and Tsingtao is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between GOLD ROAD and Tsingtao Brewery

Assuming the 90 days trading horizon GOLD ROAD is expected to generate 1.52 times less return on investment than Tsingtao Brewery. In addition to that, GOLD ROAD is 1.03 times more volatile than Tsingtao Brewery. It trades about 0.15 of its total potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.23 per unit of volatility. If you would invest  577.00  in Tsingtao Brewery on November 29, 2024 and sell it today you would earn a total of  59.00  from holding Tsingtao Brewery or generate 10.23% return on investment over 90 days.

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

GOLD ROAD RES  vs.  Tsingtao Brewery

GOLD ROAD RES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tsingtao Brewery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Tsingtao Brewery may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with GOLD ROAD and Tsingtao Brewery

The main advantage of trading using opposite GOLD ROAD and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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 GOLD ROAD RES 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.