Correlation Between Sichuan Tianqi and Risesun Real

Can any of the company-specific risk be diversified away by investing in both Sichuan Tianqi and Risesun Real 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 Sichuan Tianqi and Risesun Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sichuan Tianqi Lithium and Risesun Real Estate, you can compare the effects of market volatilities on Sichuan Tianqi and Risesun Real 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 Sichuan Tianqi with a short position of Risesun Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Tianqi and Risesun Real.

Diversification Opportunities for Sichuan Tianqi and Risesun Real

0.71

Correlation Coefficient

Sichuan Tianqi  Risesun Real

Poor diversification

The 3 months correlation between Sichuan and Risesun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Tianqi Lithium and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate and Sichuan Tianqi 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 Sichuan Tianqi Lithium are associated (or correlated) with Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Sichuan Tianqi i.e., Sichuan Tianqi and Risesun Real go up and down completely randomly.

Pair Corralation between Sichuan Tianqi and Risesun Real

Assuming the 90 days trading horizon Sichuan Tianqi Lithium is expected to under-perform the Risesun Real. But the stock apears to be less risky and, when comparing its historical volatility, Sichuan Tianqi Lithium is 1.22 times less risky than Risesun Real. The stock trades about -0.04 of its potential returns per unit of risk. The Risesun Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Risesun Real Estate on October 2, 2024 and sell it today you would lose (3.00) from holding Risesun Real Estate or give up 1.79% of portfolio value over 90 days.

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

Sichuan Tianqi Lithium  vs.  Risesun Real Estate

Sichuan Tianqi Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sichuan Tianqi Lithium 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.

Risesun Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Risesun Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Risesun Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sichuan Tianqi and Risesun Real

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

The idea behind Sichuan Tianqi Lithium and Risesun Real Estate 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 Commodity Directory module to find actively traded commodities issued by global exchanges.