Correlation Between Tsingtao Brewery and BANK CENTRAL

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

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

Diversification Opportunities for Tsingtao Brewery and BANK CENTRAL

-0.13

Correlation Coefficient

Tsingtao Brewery  BANK CENTRAL

Good diversification

The 3 months correlation between Tsingtao and BANK is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA and Tsingtao Brewery 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 Tsingtao Brewery are associated (or correlated) with BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and BANK CENTRAL go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and BANK CENTRAL

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.42 times more return on investment than BANK CENTRAL. However, Tsingtao Brewery is 1.42 times more volatile than BANK CENTRAL ASIA. It trades about 0.0 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.2 per unit of risk. If you would invest  671.00  in Tsingtao Brewery on December 27, 2024 and sell it today you would lose (6.00) from holding Tsingtao Brewery or give up 0.89% of portfolio value over 90 days.

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

Tsingtao Brewery  vs.  BANK CENTRAL ASIA

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Tsingtao Brewery and BANK CENTRAL

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

The idea behind Tsingtao Brewery and BANK CENTRAL ASIA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.