Correlation Between Tongding Interconnection and Goodwill E

Can any of the company-specific risk be diversified away by investing in both Tongding Interconnection and Goodwill E 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 Tongding Interconnection and Goodwill E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tongding Interconnection Information and Goodwill E Health, you can compare the effects of market volatilities on Tongding Interconnection and Goodwill E 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 Tongding Interconnection with a short position of Goodwill E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongding Interconnection and Goodwill E.

Diversification Opportunities for Tongding Interconnection and Goodwill E

0.53

Correlation Coefficient

Tongding Interconnection  Goodwill E

Very weak diversification

The 3 months correlation between Tongding and Goodwill is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tongding Interconnection Infor and Goodwill E Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodwill E Health and Tongding Interconnection 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 Tongding Interconnection Information are associated (or correlated) with Goodwill E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodwill E Health has no effect on the direction of Tongding Interconnection i.e., Tongding Interconnection and Goodwill E go up and down completely randomly.

Pair Corralation between Tongding Interconnection and Goodwill E

Assuming the 90 days trading horizon Tongding Interconnection Information is expected to generate 2.31 times more return on investment than Goodwill E. However, Tongding Interconnection is 2.31 times more volatile than Goodwill E Health. It trades about -0.09 of its potential returns per unit of risk. Goodwill E Health is currently generating about -0.66 per unit of risk. If you would invest  479.00  in Tongding Interconnection Information on October 7, 2024 and sell it today you would lose (62.00) from holding Tongding Interconnection Information or give up 12.94% of portfolio value over 90 days.

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

Tongding Interconnection Infor  vs.  Goodwill E Health

Tongding Interconnection

Risk-Adjusted Performance

1 of 100

Weak

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

Goodwill E Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tongding Interconnection and Goodwill E

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

The idea behind Tongding Interconnection Information and Goodwill E Health 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.