Correlation Between Tsingtao Brewery and ELMOS SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and ELMOS SEMICONDUCTOR, you can compare the effects of market volatilities on Tsingtao Brewery and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and ELMOS SEMICONDUCTOR.
Diversification Opportunities for Tsingtao Brewery and ELMOS SEMICONDUCTOR
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tsingtao and ELMOS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELMOS SEMICONDUCTOR has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and ELMOS SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and ELMOS SEMICONDUCTOR
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 2.01 times less return on investment than ELMOS SEMICONDUCTOR. But when comparing it to its historical volatility, Tsingtao Brewery is 1.54 times less risky than ELMOS SEMICONDUCTOR. It trades about 0.06 of its potential returns per unit of risk. ELMOS SEMICONDUCTOR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,380 in ELMOS SEMICONDUCTOR on November 19, 2024 and sell it today you would earn a total of 780.00 from holding ELMOS SEMICONDUCTOR or generate 12.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Tsingtao Brewery vs. ELMOS SEMICONDUCTOR
Performance |
Timeline |
Tsingtao Brewery |
ELMOS SEMICONDUCTOR |
Tsingtao Brewery and ELMOS SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tsingtao Brewery and ELMOS SEMICONDUCTOR
The main advantage of trading using opposite Tsingtao Brewery and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR will offset losses from the drop in ELMOS SEMICONDUCTOR's long position.Tsingtao Brewery vs. GAZTRTECHNIUADR15EO01 | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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