Correlation Between 5I5j Holding and Tjk Machinery

Can any of the company-specific risk be diversified away by investing in both 5I5j Holding and Tjk Machinery 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 5I5j Holding and Tjk Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5I5j Holding Group and Tjk Machinery Tianjin, you can compare the effects of market volatilities on 5I5j Holding and Tjk Machinery 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 5I5j Holding with a short position of Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5I5j Holding and Tjk Machinery.

Diversification Opportunities for 5I5j Holding and Tjk Machinery

0.64

Correlation Coefficient

5I5j Holding  Tjk Machinery

Poor diversification

The 3 months correlation between 5I5j and Tjk is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding 5I5j Holding Group and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and 5I5j Holding 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 5I5j Holding Group are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of 5I5j Holding i.e., 5I5j Holding and Tjk Machinery go up and down completely randomly.

Pair Corralation between 5I5j Holding and Tjk Machinery

Assuming the 90 days trading horizon 5I5j Holding Group is expected to under-perform the Tjk Machinery. In addition to that, 5I5j Holding is 1.2 times more volatile than Tjk Machinery Tianjin. It trades about -0.18 of its total potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about -0.06 per unit of volatility. If you would invest  1,452  in Tjk Machinery Tianjin on October 1, 2024 and sell it today you would lose (56.00) from holding Tjk Machinery Tianjin or give up 3.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

5I5j Holding Group  vs.  Tjk Machinery Tianjin

5I5j Holding Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5I5j Holding Group 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tjk Machinery Tianjin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tjk Machinery Tianjin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tjk Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 5I5j Holding and Tjk Machinery

The main advantage of trading using opposite 5I5j Holding and Tjk Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5I5j Holding position performs unexpectedly, Tjk Machinery 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 Tjk Machinery will offset losses from the drop in Tjk Machinery's long position.

The idea behind 5I5j Holding Group and Tjk Machinery Tianjin 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.