Correlation Between Tianjin Pengling and Chison Medical

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

By analyzing existing cross correlation between Tianjin Pengling Rubber and Chison Medical Technologies, you can compare the effects of market volatilities on Tianjin Pengling and Chison Medical 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 Tianjin Pengling with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Pengling and Chison Medical.

Diversification Opportunities for Tianjin Pengling and Chison Medical

0.79

Correlation Coefficient

Tianjin Pengling  Chison Medical

Poor diversification

The 3 months correlation between Tianjin and Chison is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Pengling Rubber and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Tianjin Pengling 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 Tianjin Pengling Rubber are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Tianjin Pengling i.e., Tianjin Pengling and Chison Medical go up and down completely randomly.

Pair Corralation between Tianjin Pengling and Chison Medical

Assuming the 90 days trading horizon Tianjin Pengling Rubber is expected to under-perform the Chison Medical. In addition to that, Tianjin Pengling is 1.46 times more volatile than Chison Medical Technologies. It trades about -0.39 of its total potential returns per unit of risk. Chison Medical Technologies is currently generating about -0.46 per unit of volatility. If you would invest  2,784  in Chison Medical Technologies on October 7, 2024 and sell it today you would lose (435.00) from holding Chison Medical Technologies or give up 15.62% of portfolio value over 90 days.

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

Tianjin Pengling Rubber  vs.  Chison Medical Technologies

Tianjin Pengling Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianjin Pengling Rubber 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.

Chison Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chison Medical Technologies 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.

Pair Trading with Tianjin Pengling and Chison Medical

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

The idea behind Tianjin Pengling Rubber and Chison Medical Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.