Correlation Between COL Digital and Tsinghuatongfang

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

By analyzing existing cross correlation between COL Digital Publishing and Tsinghuatongfang Co, you can compare the effects of market volatilities on COL Digital and Tsinghuatongfang 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 COL Digital with a short position of Tsinghuatongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Digital and Tsinghuatongfang.

Diversification Opportunities for COL Digital and Tsinghuatongfang

0.8

Correlation Coefficient

COL Digital  Tsinghuatongfang

Very poor diversification

The 3 months correlation between COL and Tsinghuatongfang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding COL Digital Publishing and Tsinghuatongfang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsinghuatongfang and COL Digital 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 COL Digital Publishing are associated (or correlated) with Tsinghuatongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsinghuatongfang has no effect on the direction of COL Digital i.e., COL Digital and Tsinghuatongfang go up and down completely randomly.

Pair Corralation between COL Digital and Tsinghuatongfang

Assuming the 90 days trading horizon COL Digital is expected to generate 1.01 times less return on investment than Tsinghuatongfang. In addition to that, COL Digital is 1.59 times more volatile than Tsinghuatongfang Co. It trades about 0.06 of its total potential returns per unit of risk. Tsinghuatongfang Co is currently generating about 0.09 per unit of volatility. If you would invest  494.00  in Tsinghuatongfang Co on October 26, 2024 and sell it today you would earn a total of  173.00  from holding Tsinghuatongfang Co or generate 35.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.18%
Values	Daily Returns

COL Digital Publishing  vs.  Tsinghuatongfang Co

COL Digital Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COL Digital Publishing 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tsinghuatongfang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsinghuatongfang Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with COL Digital and Tsinghuatongfang

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

The idea behind COL Digital Publishing and Tsinghuatongfang 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..