Correlation Between TravelSky Technology and Tsingtao Brewery

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

By analyzing existing cross correlation between TravelSky Technology Ltd and Tsingtao Brewery Co, you can compare the effects of market volatilities on TravelSky Technology and Tsingtao Brewery 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 TravelSky Technology with a short position of Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of TravelSky Technology and Tsingtao Brewery.

Diversification Opportunities for TravelSky Technology and Tsingtao Brewery

0.76

Correlation Coefficient

TravelSky Technology  Tsingtao Brewery

Poor diversification

The 3 months correlation between TravelSky and Tsingtao is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TravelSky Technology Ltd and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and TravelSky Technology 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 TravelSky Technology Ltd are associated (or correlated) with Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of TravelSky Technology i.e., TravelSky Technology and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between TravelSky Technology and Tsingtao Brewery

Assuming the 90 days horizon TravelSky Technology is expected to generate 12.92 times less return on investment than Tsingtao Brewery. But when comparing it to its historical volatility, TravelSky Technology Ltd is 1.32 times less risky than Tsingtao Brewery. It trades about 0.02 of its potential returns per unit of risk. Tsingtao Brewery Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,143  in Tsingtao Brewery Co on October 1, 2024 and sell it today you would earn a total of  352.00  from holding Tsingtao Brewery Co or generate 11.2% return on investment over 90 days.

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

TravelSky Technology Ltd  vs.  Tsingtao Brewery Co

TravelSky Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TravelSky Technology Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, TravelSky Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Tsingtao Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsingtao Brewery Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tsingtao Brewery is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TravelSky Technology and Tsingtao Brewery

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

The idea behind TravelSky Technology Ltd and Tsingtao Brewery Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.