Correlation Between Tianshui Huatian and Changjiang Publishing

Can any of the company-specific risk be diversified away by investing in both Tianshui Huatian and Changjiang Publishing 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 Changjiang Publishing 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 Changjiang Publishing Media, you can compare the effects of market volatilities on Tianshui Huatian and Changjiang Publishing 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 Changjiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianshui Huatian and Changjiang Publishing.

Diversification Opportunities for Tianshui Huatian and Changjiang Publishing

-0.19

Correlation Coefficient

Tianshui Huatian  Changjiang Publishing

Good diversification

The 3 months correlation between Tianshui and Changjiang is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tianshui Huatian Technology and Changjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changjiang Publishing 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 Changjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changjiang Publishing has no effect on the direction of Tianshui Huatian i.e., Tianshui Huatian and Changjiang Publishing go up and down completely randomly.

Pair Corralation between Tianshui Huatian and Changjiang Publishing

Assuming the 90 days trading horizon Tianshui Huatian Technology is expected to generate 1.37 times more return on investment than Changjiang Publishing. However, Tianshui Huatian is 1.37 times more volatile than Changjiang Publishing Media. It trades about 0.06 of its potential returns per unit of risk. Changjiang Publishing Media is currently generating about 0.05 per unit of risk. If you would invest  768.00  in Tianshui Huatian Technology on October 9, 2024 and sell it today you would earn a total of  320.00  from holding Tianshui Huatian Technology or generate 41.67% return on investment over 90 days.

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

Tianshui Huatian Technology  vs.  Changjiang Publishing Media

Tianshui Huatian Tec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianshui Huatian Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tianshui Huatian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changjiang Publishing

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Changjiang Publishing Media are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changjiang Publishing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tianshui Huatian and Changjiang Publishing

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

The idea behind Tianshui Huatian Technology and Changjiang Publishing Media 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.