Correlation Between TRI CHEMICAL and ZIJIN MINH

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

By analyzing existing cross correlation between TRI CHEMICAL LABORATINC and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on TRI CHEMICAL and ZIJIN MINH 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 TRI CHEMICAL with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRI CHEMICAL and ZIJIN MINH.

Diversification Opportunities for TRI CHEMICAL and ZIJIN MINH

0.57

Correlation Coefficient

TRI CHEMICAL  ZIJIN MINH

Very weak diversification

The 3 months correlation between TRI and ZIJIN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TRI CHEMICAL LABORATINC and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and TRI CHEMICAL 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 TRI CHEMICAL LABORATINC are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of TRI CHEMICAL i.e., TRI CHEMICAL and ZIJIN MINH go up and down completely randomly.

Pair Corralation between TRI CHEMICAL and ZIJIN MINH

Assuming the 90 days horizon TRI CHEMICAL LABORATINC is expected to generate 0.8 times more return on investment than ZIJIN MINH. However, TRI CHEMICAL LABORATINC is 1.26 times less risky than ZIJIN MINH. It trades about -0.1 of its potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about -0.1 per unit of risk. If you would invest  2,060  in TRI CHEMICAL LABORATINC on October 4, 2024 and sell it today you would lose (330.00) from holding TRI CHEMICAL LABORATINC or give up 16.02% of portfolio value over 90 days.

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

TRI CHEMICAL LABORATINC  vs.  ZIJIN MINH UNSPADR20

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRI CHEMICAL LABORATINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIJIN MINH UNSPADR20 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRI CHEMICAL and ZIJIN MINH

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

The idea behind TRI CHEMICAL LABORATINC and ZIJIN MINH UNSPADR20 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.