Correlation Between Tianjin Pengling and Biwin Storage

Can any of the company-specific risk be diversified away by investing in both Tianjin Pengling and Biwin Storage 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 Biwin Storage 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 Biwin Storage Technology, you can compare the effects of market volatilities on Tianjin Pengling and Biwin Storage 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 Biwin Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Pengling and Biwin Storage.

Diversification Opportunities for Tianjin Pengling and Biwin Storage

0.41

Correlation Coefficient

Tianjin Pengling  Biwin Storage

Very weak diversification

The 3 months correlation between Tianjin and Biwin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Pengling Rubber and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology 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 Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Tianjin Pengling i.e., Tianjin Pengling and Biwin Storage go up and down completely randomly.

Pair Corralation between Tianjin Pengling and Biwin Storage

Assuming the 90 days trading horizon Tianjin Pengling Rubber is expected to generate 0.83 times more return on investment than Biwin Storage. However, Tianjin Pengling Rubber is 1.2 times less risky than Biwin Storage. It trades about 0.02 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.02 per unit of risk. If you would invest  416.00  in Tianjin Pengling Rubber on October 5, 2024 and sell it today you would earn a total of  12.00  from holding Tianjin Pengling Rubber or generate 2.88% return on investment over 90 days.

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

Tianjin Pengling Rubber  vs.  Biwin Storage Technology

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.

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biwin Storage Technology 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 Biwin Storage

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

The idea behind Tianjin Pengling Rubber and Biwin Storage Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.