Correlation Between Tjk Machinery and Kunwu Jiuding

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

By analyzing existing cross correlation between Tjk Machinery Tianjin and Kunwu Jiuding Investment, you can compare the effects of market volatilities on Tjk Machinery and Kunwu Jiuding 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 Tjk Machinery with a short position of Kunwu Jiuding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tjk Machinery and Kunwu Jiuding.

Diversification Opportunities for Tjk Machinery and Kunwu Jiuding

0.6

Correlation Coefficient

Tjk Machinery  Kunwu Jiuding

Poor diversification

The 3 months correlation between Tjk and Kunwu is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tjk Machinery Tianjin and Kunwu Jiuding Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunwu Jiuding Investment and Tjk Machinery 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 Tjk Machinery Tianjin are associated (or correlated) with Kunwu Jiuding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunwu Jiuding Investment has no effect on the direction of Tjk Machinery i.e., Tjk Machinery and Kunwu Jiuding go up and down completely randomly.

Pair Corralation between Tjk Machinery and Kunwu Jiuding

Assuming the 90 days trading horizon Tjk Machinery Tianjin is expected to generate 1.07 times more return on investment than Kunwu Jiuding. However, Tjk Machinery is 1.07 times more volatile than Kunwu Jiuding Investment. It trades about 0.03 of its potential returns per unit of risk. Kunwu Jiuding Investment is currently generating about 0.02 per unit of risk. If you would invest  1,118  in Tjk Machinery Tianjin on September 26, 2024 and sell it today you would earn a total of  234.00  from holding Tjk Machinery Tianjin or generate 20.93% return on investment over 90 days.

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

Tjk Machinery Tianjin  vs.  Kunwu Jiuding Investment

Tjk Machinery Tianjin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tjk Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Kunwu Jiuding Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tjk Machinery and Kunwu Jiuding

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

The idea behind Tjk Machinery Tianjin and Kunwu Jiuding Investment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.