Correlation Between Tianjin LVYIN and Xiangpiaopiao Food

Can any of the company-specific risk be diversified away by investing in both Tianjin LVYIN and Xiangpiaopiao Food 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 Tianjin LVYIN and Xiangpiaopiao Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianjin LVYIN Landscape and Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Tianjin LVYIN and Xiangpiaopiao Food 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 Tianjin LVYIN with a short position of Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin LVYIN and Xiangpiaopiao Food.

Diversification Opportunities for Tianjin LVYIN and Xiangpiaopiao Food

0.49

Correlation Coefficient

Tianjin LVYIN  Xiangpiaopiao Food

Very weak diversification

The 3 months correlation between Tianjin and Xiangpiaopiao is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin LVYIN Landscape and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food and Tianjin LVYIN 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 Tianjin LVYIN Landscape are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Tianjin LVYIN i.e., Tianjin LVYIN and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Tianjin LVYIN and Xiangpiaopiao Food

Assuming the 90 days trading horizon Tianjin LVYIN Landscape is expected to under-perform the Xiangpiaopiao Food. But the stock apears to be less risky and, when comparing its historical volatility, Tianjin LVYIN Landscape is 1.51 times less risky than Xiangpiaopiao Food. The stock trades about -0.16 of its potential returns per unit of risk. The Xiangpiaopiao Food Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,688  in Xiangpiaopiao Food Co on October 11, 2024 and sell it today you would lose (181.00) from holding Xiangpiaopiao Food Co or give up 10.72% of portfolio value over 90 days.

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

Tianjin LVYIN Landscape  vs.  Xiangpiaopiao Food Co

Tianjin LVYIN Landscape

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin LVYIN Landscape are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin LVYIN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xiangpiaopiao Food

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tianjin LVYIN and Xiangpiaopiao Food

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

The idea behind Tianjin LVYIN Landscape and Xiangpiaopiao Food Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.