Correlation Between Thunder Software and Renrenle Commercial

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

By analyzing existing cross correlation between Thunder Software Technology and Renrenle Commercial Group, you can compare the effects of market volatilities on Thunder Software and Renrenle Commercial 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 Thunder Software with a short position of Renrenle Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Software and Renrenle Commercial.

Diversification Opportunities for Thunder Software and Renrenle Commercial

0.31

Correlation Coefficient

Thunder Software  Renrenle Commercial

Weak diversification

The 3 months correlation between Thunder and Renrenle is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Software Technology and Renrenle Commercial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renrenle Commercial and Thunder Software 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 Thunder Software Technology are associated (or correlated) with Renrenle Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renrenle Commercial has no effect on the direction of Thunder Software i.e., Thunder Software and Renrenle Commercial go up and down completely randomly.

Pair Corralation between Thunder Software and Renrenle Commercial

Assuming the 90 days trading horizon Thunder Software Technology is expected to generate 0.88 times more return on investment than Renrenle Commercial. However, Thunder Software Technology is 1.14 times less risky than Renrenle Commercial. It trades about -0.02 of its potential returns per unit of risk. Renrenle Commercial Group is currently generating about -0.03 per unit of risk. If you would invest  11,095  in Thunder Software Technology on October 25, 2024 and sell it today you would lose (5,567) from holding Thunder Software Technology or give up 50.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Thunder Software Technology  vs.  Renrenle Commercial Group

Thunder Software Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunder Software Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thunder Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Renrenle Commercial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Renrenle Commercial Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renrenle Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thunder Software and Renrenle Commercial

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

The idea behind Thunder Software Technology and Renrenle Commercial Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.