Correlation Between Tsingtao Brewery and Advanced Info

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

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

Diversification Opportunities for Tsingtao Brewery and Advanced Info

0.25

Correlation Coefficient

Tsingtao Brewery  Advanced Info

Modest diversification

The 3 months correlation between Tsingtao and Advanced is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service 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 Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and Advanced Info go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and Advanced Info

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 8.94 times less return on investment than Advanced Info. But when comparing it to its historical volatility, Tsingtao Brewery is 1.17 times less risky than Advanced Info. It trades about 0.01 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  740.00  in Advanced Info Service on October 25, 2024 and sell it today you would earn a total of  60.00  from holding Advanced Info Service or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Tsingtao Brewery  vs.  Advanced Info Service

Tsingtao Brewery

Risk-Adjusted Performance

0 of 100

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.

Advanced Info Service

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tsingtao Brewery and Advanced Info

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

The idea behind Tsingtao Brewery and Advanced Info Service 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.