Correlation Between Sichuan Tianqi and V V

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

Diversification Opportunities for Sichuan Tianqi and V V

-0.05

Correlation Coefficient

Sichuan Tianqi  V V

Good diversification

The 3 months correlation between Sichuan and 600300 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Tianqi Lithium and V V Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V V Food 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 V V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V V Food has no effect on the direction of Sichuan Tianqi i.e., Sichuan Tianqi and V V go up and down completely randomly.

Pair Corralation between Sichuan Tianqi and V V

Assuming the 90 days trading horizon Sichuan Tianqi Lithium is expected to generate 0.77 times more return on investment than V V. However, Sichuan Tianqi Lithium is 1.31 times less risky than V V. It trades about -0.09 of its potential returns per unit of risk. V V Food is currently generating about -0.19 per unit of risk. If you would invest  3,484  in Sichuan Tianqi Lithium on October 21, 2024 and sell it today you would lose (145.00) from holding Sichuan Tianqi Lithium or give up 4.16% of portfolio value over 90 days.

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

Sichuan Tianqi Lithium  vs.  V V Food

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 somewhat strong basic indicators, Sichuan Tianqi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

V V Food

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in V V Food are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V V sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sichuan Tianqi and V V

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

The idea behind Sichuan Tianqi Lithium and V V Food 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.