Correlation Between Tianjin Yiyi and Rising Nonferrous

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

By analyzing existing cross correlation between Tianjin Yiyi Hygiene and Rising Nonferrous Metals, you can compare the effects of market volatilities on Tianjin Yiyi and Rising Nonferrous 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 Tianjin Yiyi with a short position of Rising Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Yiyi and Rising Nonferrous.

Diversification Opportunities for Tianjin Yiyi and Rising Nonferrous

0.17

Correlation Coefficient

Tianjin Yiyi  Rising Nonferrous

Average diversification

The 3 months correlation between Tianjin and Rising is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Yiyi Hygiene and Rising Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Nonferrous Metals and Tianjin Yiyi 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 Tianjin Yiyi Hygiene are associated (or correlated) with Rising Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Nonferrous Metals has no effect on the direction of Tianjin Yiyi i.e., Tianjin Yiyi and Rising Nonferrous go up and down completely randomly.

Pair Corralation between Tianjin Yiyi and Rising Nonferrous

Assuming the 90 days trading horizon Tianjin Yiyi Hygiene is expected to generate 1.12 times more return on investment than Rising Nonferrous. However, Tianjin Yiyi is 1.12 times more volatile than Rising Nonferrous Metals. It trades about 0.03 of its potential returns per unit of risk. Rising Nonferrous Metals is currently generating about -0.03 per unit of risk. If you would invest  1,575  in Tianjin Yiyi Hygiene on October 11, 2024 and sell it today you would earn a total of  275.00  from holding Tianjin Yiyi Hygiene or generate 17.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Tianjin Yiyi Hygiene  vs.  Rising Nonferrous Metals

Tianjin Yiyi Hygiene

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Yiyi Hygiene are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Yiyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Rising Nonferrous Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Nonferrous Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rising Nonferrous may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tianjin Yiyi and Rising Nonferrous

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

The idea behind Tianjin Yiyi Hygiene and Rising Nonferrous Metals 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.