Correlation Between Tianshui Huatian and NBTM New

Can any of the company-specific risk be diversified away by investing in both Tianshui Huatian and NBTM New 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 Tianshui Huatian and NBTM New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianshui Huatian Technology and NBTM New Materials, you can compare the effects of market volatilities on Tianshui Huatian and NBTM New 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 Tianshui Huatian with a short position of NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianshui Huatian and NBTM New.

Diversification Opportunities for Tianshui Huatian and NBTM New

0.51

Correlation Coefficient

Tianshui Huatian  NBTM New

Very weak diversification

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

Pair Corralation between Tianshui Huatian and NBTM New

Assuming the 90 days trading horizon Tianshui Huatian Technology is expected to generate 0.84 times more return on investment than NBTM New. However, Tianshui Huatian Technology is 1.19 times less risky than NBTM New. It trades about 0.13 of its potential returns per unit of risk. NBTM New Materials is currently generating about 0.06 per unit of risk. If you would invest  812.00  in Tianshui Huatian Technology on September 29, 2024 and sell it today you would earn a total of  423.00  from holding Tianshui Huatian Technology or generate 52.09% return on investment over 90 days.

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

Tianshui Huatian Technology  vs.  NBTM New Materials

Tianshui Huatian Tec

Risk-Adjusted Performance

11 of 100

Good

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

NBTM New Materials

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Tianshui Huatian and NBTM New

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

The idea behind Tianshui Huatian Technology and NBTM New Materials 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.

Check out your portfolio center.

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.