Correlation Between Tianshan Aluminum and Silkroad Visual

Can any of the company-specific risk be diversified away by investing in both Tianshan Aluminum and Silkroad Visual 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 Tianshan Aluminum and Silkroad Visual into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianshan Aluminum Group and Silkroad Visual Technology, you can compare the effects of market volatilities on Tianshan Aluminum and Silkroad Visual 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 Tianshan Aluminum with a short position of Silkroad Visual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianshan Aluminum and Silkroad Visual.

Diversification Opportunities for Tianshan Aluminum and Silkroad Visual

0.22

Correlation Coefficient

Tianshan Aluminum  Silkroad Visual

Modest diversification

The 3 months correlation between Tianshan and Silkroad is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tianshan Aluminum Group and Silkroad Visual Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkroad Visual Tech and Tianshan Aluminum 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 Tianshan Aluminum Group are associated (or correlated) with Silkroad Visual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkroad Visual Tech has no effect on the direction of Tianshan Aluminum i.e., Tianshan Aluminum and Silkroad Visual go up and down completely randomly.

Pair Corralation between Tianshan Aluminum and Silkroad Visual

Assuming the 90 days trading horizon Tianshan Aluminum is expected to generate 4.51 times less return on investment than Silkroad Visual. But when comparing it to its historical volatility, Tianshan Aluminum Group is 1.82 times less risky than Silkroad Visual. It trades about 0.01 of its potential returns per unit of risk. Silkroad Visual Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,860  in Silkroad Visual Technology on October 11, 2024 and sell it today you would lose (86.00) from holding Silkroad Visual Technology or give up 4.62% of portfolio value over 90 days.

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

Tianshan Aluminum Group  vs.  Silkroad Visual Technology

Tianshan Aluminum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianshan Aluminum Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tianshan Aluminum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Silkroad Visual Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tianshan Aluminum and Silkroad Visual

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

The idea behind Tianshan Aluminum Group and Silkroad Visual Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.