Correlation Between X Financial and Tsingtao Brewery

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

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

Diversification Opportunities for X Financial and Tsingtao Brewery

0.11

Correlation Coefficient

X Financial  Tsingtao Brewery

Average diversification

The 3 months correlation between XYF and Tsingtao is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery and X Financial 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 X Financial Class 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 X Financial i.e., X Financial and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between X Financial and Tsingtao Brewery

Considering the 90-day investment horizon X Financial Class is expected to generate 0.83 times more return on investment than Tsingtao Brewery. However, X Financial Class is 1.21 times less risky than Tsingtao Brewery. It trades about 0.08 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.01 per unit of risk. If you would invest  395.00  in X Financial Class on October 4, 2024 and sell it today you would earn a total of  446.00  from holding X Financial Class or generate 112.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.6%
Values	Daily Returns

X Financial Class  vs.  Tsingtao Brewery

X Financial Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with X Financial and Tsingtao Brewery

The main advantage of trading using opposite X Financial and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Financial 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 X Financial Class and Tsingtao Brewery 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.