Correlation Between Tsingtao Brewery and CEOTRONICS

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

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

Diversification Opportunities for Tsingtao Brewery and CEOTRONICS

0.06

Correlation Coefficient

Tsingtao Brewery  CEOTRONICS

Significant diversification

The 3 months correlation between Tsingtao and CEOTRONICS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and CEOTRONICS go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and CEOTRONICS

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 0.41 times more return on investment than CEOTRONICS. However, Tsingtao Brewery is 2.43 times less risky than CEOTRONICS. It trades about 0.36 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.13 per unit of risk. If you would invest  567.00  in Tsingtao Brewery on September 23, 2024 and sell it today you would earn a total of  90.00  from holding Tsingtao Brewery or generate 15.87% return on investment over 90 days.

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

Tsingtao Brewery  vs.  CEOTRONICS

Tsingtao Brewery

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Tsingtao Brewery exhibited solid returns over the last few months and may actually be approaching a breakup point.

CEOTRONICS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsingtao Brewery and CEOTRONICS

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

The idea behind Tsingtao Brewery and CEOTRONICS 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.