Correlation Between Tieling Newcity and Beijing HuaYuanYiTong

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

By analyzing existing cross correlation between Tieling Newcity Investment and Beijing HuaYuanYiTong Thermal, you can compare the effects of market volatilities on Tieling Newcity and Beijing HuaYuanYiTong 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 Tieling Newcity with a short position of Beijing HuaYuanYiTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tieling Newcity and Beijing HuaYuanYiTong.

Diversification Opportunities for Tieling Newcity and Beijing HuaYuanYiTong

-0.51

Correlation Coefficient

Tieling Newcity  Beijing HuaYuanYiTong

Excellent diversification

The 3 months correlation between Tieling and Beijing is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tieling Newcity Investment and Beijing HuaYuanYiTong Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing HuaYuanYiTong and Tieling Newcity 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 Tieling Newcity Investment are associated (or correlated) with Beijing HuaYuanYiTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing HuaYuanYiTong has no effect on the direction of Tieling Newcity i.e., Tieling Newcity and Beijing HuaYuanYiTong go up and down completely randomly.

Pair Corralation between Tieling Newcity and Beijing HuaYuanYiTong

Assuming the 90 days trading horizon Tieling Newcity is expected to generate 2.19 times less return on investment than Beijing HuaYuanYiTong. But when comparing it to its historical volatility, Tieling Newcity Investment is 1.17 times less risky than Beijing HuaYuanYiTong. It trades about 0.01 of its potential returns per unit of risk. Beijing HuaYuanYiTong Thermal is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  912.00  in Beijing HuaYuanYiTong Thermal on October 25, 2024 and sell it today you would earn a total of  46.00  from holding Beijing HuaYuanYiTong Thermal or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Tieling Newcity Investment  vs.  Beijing HuaYuanYiTong Thermal

Tieling Newcity Inve

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tieling Newcity Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tieling Newcity sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing HuaYuanYiTong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing HuaYuanYiTong Thermal 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tieling Newcity and Beijing HuaYuanYiTong

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

The idea behind Tieling Newcity Investment and Beijing HuaYuanYiTong Thermal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.