Correlation Between Tsingtao Brewery and SPORTING

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

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

Diversification Opportunities for Tsingtao Brewery and SPORTING

0.46

Correlation Coefficient

Tsingtao Brewery  SPORTING

Very weak diversification

The 3 months correlation between Tsingtao and SPORTING is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and SPORTING go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and SPORTING

Assuming the 90 days trading horizon Tsingtao Brewery is expected to under-perform the SPORTING. But the stock apears to be less risky and, when comparing its historical volatility, Tsingtao Brewery is 2.16 times less risky than SPORTING. The stock trades about -0.07 of its potential returns per unit of risk. The SPORTING is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  96.00  in SPORTING on April 24, 2025 and sell it today you would lose (5.00) from holding SPORTING or give up 5.21% of portfolio value over 90 days.

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

Tsingtao Brewery  vs.  SPORTING

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 unsteady 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.

SPORTING

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SPORTING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tsingtao Brewery and SPORTING

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

The idea behind Tsingtao Brewery and SPORTING 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.