Correlation Between Gotion High and Tjk Machinery

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

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

Diversification Opportunities for Gotion High and Tjk Machinery

0.68

Correlation Coefficient

Gotion High  Tjk Machinery

Poor diversification

The 3 months correlation between Gotion and Tjk is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gotion High tech 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 Gotion High 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 Gotion High tech 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 Gotion High i.e., Gotion High and Tjk Machinery go up and down completely randomly.

Pair Corralation between Gotion High and Tjk Machinery

Assuming the 90 days trading horizon Gotion High tech is expected to under-perform the Tjk Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Gotion High tech is 2.4 times less risky than Tjk Machinery. The stock trades about -0.27 of its potential returns per unit of risk. The Tjk Machinery Tianjin is currently generating about -0.06 of returns per unit of risk over similar time horizon. 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	100.0%
Values	Daily Returns

Gotion High tech  vs.  Tjk Machinery Tianjin

Gotion High tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gotion High tech 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 Gotion High and Tjk Machinery

The main advantage of trading using opposite Gotion High and Tjk Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotion High 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 Gotion High tech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.