Correlation Between TRAINLINE PLC and New China

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

By analyzing existing cross correlation between TRAINLINE PLC LS and New China Life, you can compare the effects of market volatilities on TRAINLINE PLC and New China 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 TRAINLINE PLC with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and New China.

Diversification Opportunities for TRAINLINE PLC and New China

0.0

Correlation Coefficient

TRAINLINE PLC  New China

Pay attention - limited upside

The 3 months correlation between TRAINLINE and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and New China go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and New China

If you would invest (100.00) in New China Life on December 26, 2024 and sell it today you would earn a total of  100.00  from holding New China Life or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TRAINLINE PLC LS  vs.  New China Life

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

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

New China Life

Risk-Adjusted Performance

Modest

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

Pair Trading with TRAINLINE PLC and New China

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

The idea behind TRAINLINE PLC LS and New China Life 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.