Correlation Between Tsingtao Brewery and Platinum Investment

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

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

Diversification Opportunities for Tsingtao Brewery and Platinum Investment

0.52

Correlation Coefficient

Tsingtao Brewery  Platinum Investment

Very weak diversification

The 3 months correlation between Tsingtao and Platinum is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and Platinum Investment go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and Platinum Investment

Assuming the 90 days trading horizon Tsingtao Brewery is expected to under-perform the Platinum Investment. But the stock apears to be less risky and, when comparing its historical volatility, Tsingtao Brewery is 2.67 times less risky than Platinum Investment. The stock trades about -0.09 of its potential returns per unit of risk. The Platinum Investment Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Platinum Investment Management on April 20, 2025 and sell it today you would earn a total of  3.00  from holding Platinum Investment Management or generate 10.0% return on investment over 90 days.

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

Tsingtao Brewery  vs.  Platinum Investment Management

Tsingtao Brewery

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Platinum Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Platinum Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsingtao Brewery and Platinum Investment

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

The idea behind Tsingtao Brewery and Platinum Investment Management 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.