Correlation Between Tieling Newcity and Eastroc Beverage

Can any of the company-specific risk be diversified away by investing in both Tieling Newcity and Eastroc Beverage 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 Eastroc Beverage 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 Eastroc Beverage Group, you can compare the effects of market volatilities on Tieling Newcity and Eastroc Beverage 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 Eastroc Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tieling Newcity and Eastroc Beverage.

Diversification Opportunities for Tieling Newcity and Eastroc Beverage

0.5

Correlation Coefficient

Tieling Newcity  Eastroc Beverage

Very weak diversification

The 3 months correlation between Tieling and Eastroc is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tieling Newcity Investment and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage 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 Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of Tieling Newcity i.e., Tieling Newcity and Eastroc Beverage go up and down completely randomly.

Pair Corralation between Tieling Newcity and Eastroc Beverage

Assuming the 90 days trading horizon Tieling Newcity Investment is expected to generate 1.01 times more return on investment than Eastroc Beverage. However, Tieling Newcity is 1.01 times more volatile than Eastroc Beverage Group. It trades about 0.08 of its potential returns per unit of risk. Eastroc Beverage Group is currently generating about -0.02 per unit of risk. If you would invest  291.00  in Tieling Newcity Investment on December 25, 2024 and sell it today you would earn a total of  32.00  from holding Tieling Newcity Investment or generate 11.0% return on investment over 90 days.

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

Tieling Newcity Investment  vs.  Eastroc Beverage Group

Tieling Newcity Inve

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tieling Newcity Investment are ranked lower than 6 (%) 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.

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tieling Newcity and Eastroc Beverage

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

The idea behind Tieling Newcity Investment and Eastroc Beverage Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.