Correlation Between Tongxing Environmental and Qiaoyin Environmental

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

By analyzing existing cross correlation between Tongxing Environmental Protection and Qiaoyin Environmental Tech, you can compare the effects of market volatilities on Tongxing Environmental and Qiaoyin Environmental 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 Tongxing Environmental with a short position of Qiaoyin Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Qiaoyin Environmental.

Diversification Opportunities for Tongxing Environmental and Qiaoyin Environmental

0.04

Correlation Coefficient

Tongxing Environmental  Qiaoyin Environmental

Significant diversification

The 3 months correlation between Tongxing and Qiaoyin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Qiaoyin Environmental Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiaoyin Environmental and Tongxing Environmental 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 Tongxing Environmental Protection are associated (or correlated) with Qiaoyin Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiaoyin Environmental has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Qiaoyin Environmental go up and down completely randomly.

Pair Corralation between Tongxing Environmental and Qiaoyin Environmental

Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to under-perform the Qiaoyin Environmental. In addition to that, Tongxing Environmental is 1.36 times more volatile than Qiaoyin Environmental Tech. It trades about -0.26 of its total potential returns per unit of risk. Qiaoyin Environmental Tech is currently generating about -0.07 per unit of volatility. If you would invest  1,079  in Qiaoyin Environmental Tech on October 10, 2024 and sell it today you would lose (46.00) from holding Qiaoyin Environmental Tech or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tongxing Environmental Protect  vs.  Qiaoyin Environmental Tech

Tongxing Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

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

Qiaoyin Environmental

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Tongxing Environmental and Qiaoyin Environmental

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

The idea behind Tongxing Environmental Protection and Qiaoyin Environmental Tech 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.