Correlation Between CNPC Capital and Tjk Machinery

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

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

Diversification Opportunities for CNPC Capital and Tjk Machinery

0.65

Correlation Coefficient

CNPC Capital  Tjk Machinery

Poor diversification

The 3 months correlation between CNPC and Tjk is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CNPC Capital Co 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 CNPC Capital 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 CNPC Capital Co 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 CNPC Capital i.e., CNPC Capital and Tjk Machinery go up and down completely randomly.

Pair Corralation between CNPC Capital and Tjk Machinery

Assuming the 90 days trading horizon CNPC Capital Co is expected to generate 1.04 times more return on investment than Tjk Machinery. However, CNPC Capital is 1.04 times more volatile than Tjk Machinery Tianjin. It trades about 0.08 of its potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about 0.08 per unit of risk. If you would invest  536.00  in CNPC Capital Co on September 22, 2024 and sell it today you would earn a total of  181.00  from holding CNPC Capital Co or generate 33.77% return on investment over 90 days.

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

CNPC Capital Co  vs.  Tjk Machinery Tianjin

CNPC Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNPC Capital Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CNPC Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Tjk Machinery Tianjin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tjk Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNPC Capital and Tjk Machinery

The main advantage of trading using opposite CNPC Capital and Tjk Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNPC Capital 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 CNPC Capital Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.