Correlation Between Gladstone Investment and TIANDE CHEMICAL

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

By analyzing existing cross correlation between Gladstone Investment and TIANDE CHEMICAL, you can compare the effects of market volatilities on Gladstone Investment and TIANDE CHEMICAL 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 Gladstone Investment with a short position of TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and TIANDE CHEMICAL.

Diversification Opportunities for Gladstone Investment and TIANDE CHEMICAL

0.23

Correlation Coefficient

Gladstone Investment  TIANDE CHEMICAL

Modest diversification

The 3 months correlation between Gladstone and TIANDE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and TIANDE CHEMICAL go up and down completely randomly.

Pair Corralation between Gladstone Investment and TIANDE CHEMICAL

Assuming the 90 days horizon Gladstone Investment is expected to generate 2.58 times less return on investment than TIANDE CHEMICAL. But when comparing it to its historical volatility, Gladstone Investment is 2.32 times less risky than TIANDE CHEMICAL. It trades about 0.05 of its potential returns per unit of risk. TIANDE CHEMICAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.08  in TIANDE CHEMICAL on October 23, 2024 and sell it today you would earn a total of  4.17  from holding TIANDE CHEMICAL or generate 135.39% return on investment over 90 days.

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

Gladstone Investment  vs.  TIANDE CHEMICAL

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

TIANDE CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIANDE CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TIANDE CHEMICAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gladstone Investment and TIANDE CHEMICAL

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

The idea behind Gladstone Investment and TIANDE CHEMICAL 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.