Correlation Between Tsingtao Brewery and COMBA TELECOM

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

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

Diversification Opportunities for Tsingtao Brewery and COMBA TELECOM

0.48

Correlation Coefficient

Tsingtao Brewery  COMBA TELECOM

Very weak diversification

The 3 months correlation between Tsingtao and COMBA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST 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 COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and COMBA TELECOM go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and COMBA TELECOM

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.13 times more return on investment than COMBA TELECOM. However, Tsingtao Brewery is 1.13 times more volatile than COMBA TELECOM SYST. It trades about 0.3 of its potential returns per unit of risk. COMBA TELECOM SYST is currently generating about 0.21 per unit of risk. If you would invest  587.00  in Tsingtao Brewery on September 19, 2024 and sell it today you would earn a total of  80.00  from holding Tsingtao Brewery or generate 13.63% return on investment over 90 days.

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

Tsingtao Brewery  vs.  COMBA TELECOM SYST

Tsingtao Brewery

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 12 (%) 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.

COMBA TELECOM SYST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMBA TELECOM SYST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, COMBA TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tsingtao Brewery and COMBA TELECOM

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

The idea behind Tsingtao Brewery and COMBA TELECOM SYST 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.