Correlation Between Tianshui Huatian and Anhui Yingjia

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

Diversification Opportunities for Tianshui Huatian and Anhui Yingjia

-0.02

Correlation Coefficient

Tianshui Huatian  Anhui Yingjia

Good diversification

The 3 months correlation between Tianshui and Anhui is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tianshui Huatian Technology and Anhui Yingjia Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Yingjia Distillery 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 Anhui Yingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Yingjia Distillery has no effect on the direction of Tianshui Huatian i.e., Tianshui Huatian and Anhui Yingjia go up and down completely randomly.

Pair Corralation between Tianshui Huatian and Anhui Yingjia

Assuming the 90 days trading horizon Tianshui Huatian Technology is expected to generate 1.33 times more return on investment than Anhui Yingjia. However, Tianshui Huatian is 1.33 times more volatile than Anhui Yingjia Distillery. It trades about 0.05 of its potential returns per unit of risk. Anhui Yingjia Distillery is currently generating about -0.11 per unit of risk. If you would invest  1,000.00  in Tianshui Huatian Technology on October 10, 2024 and sell it today you would earn a total of  78.00  from holding Tianshui Huatian Technology or generate 7.8% 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.  Anhui Yingjia Distillery

Tianshui Huatian Tec

Risk-Adjusted Performance

3 of 100

Insignificant

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

Anhui Yingjia Distillery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Yingjia Distillery 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tianshui Huatian and Anhui Yingjia

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

The idea behind Tianshui Huatian Technology and Anhui Yingjia Distillery 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.