Correlation Between Tianshan Aluminum and Kunwu Jiuding

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

Diversification Opportunities for Tianshan Aluminum and Kunwu Jiuding

-0.26

Correlation Coefficient

Tianshan Aluminum  Kunwu Jiuding

Very good diversification

The 3 months correlation between Tianshan and Kunwu is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tianshan Aluminum Group and Kunwu Jiuding Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunwu Jiuding Investment 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 Kunwu Jiuding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunwu Jiuding Investment has no effect on the direction of Tianshan Aluminum i.e., Tianshan Aluminum and Kunwu Jiuding go up and down completely randomly.

Pair Corralation between Tianshan Aluminum and Kunwu Jiuding

Assuming the 90 days trading horizon Tianshan Aluminum Group is expected to generate 0.67 times more return on investment than Kunwu Jiuding. However, Tianshan Aluminum Group is 1.49 times less risky than Kunwu Jiuding. It trades about 0.12 of its potential returns per unit of risk. Kunwu Jiuding Investment is currently generating about -0.04 per unit of risk. If you would invest  805.00  in Tianshan Aluminum Group on December 25, 2024 and sell it today you would earn a total of  105.00  from holding Tianshan Aluminum Group or generate 13.04% return on investment over 90 days.

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

Tianshan Aluminum Group  vs.  Kunwu Jiuding Investment

Tianshan Aluminum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tianshan Aluminum Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianshan Aluminum sustained solid returns over the last few months and may actually be approaching a breakup point.

Kunwu Jiuding Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kunwu Jiuding Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Tianshan Aluminum and Kunwu Jiuding

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

The idea behind Tianshan Aluminum Group and Kunwu Jiuding Investment 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.