Correlation Between Tsingtao Brewery and AP Møller

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

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

Diversification Opportunities for Tsingtao Brewery and AP Møller

0.12

Correlation Coefficient

Tsingtao Brewery  AP Møller

Average diversification

The 3 months correlation between Tsingtao and DP4B is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller 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 AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and AP Møller go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and AP Møller

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 1.52 times more return on investment than AP Møller. However, Tsingtao Brewery is 1.52 times more volatile than AP Mller . It trades about 0.1 of its potential returns per unit of risk. AP Mller is currently generating about 0.13 per unit of risk. If you would invest  491.00  in Tsingtao Brewery on September 4, 2024 and sell it today you would earn a total of  110.00  from holding Tsingtao Brewery or generate 22.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Tsingtao Brewery  vs.  AP Mller

Tsingtao Brewery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Tsingtao Brewery exhibited solid returns over the last few months and may actually be approaching a breakup point.

AP Møller

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AP Møller reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsingtao Brewery and AP Møller

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

The idea behind Tsingtao Brewery and AP Mller 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 Commodity Directory module to find actively traded commodities issued by global exchanges.