Correlation Between Iat Automobile and Tjk Machinery

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

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

Diversification Opportunities for Iat Automobile and Tjk Machinery

0.93

Correlation Coefficient

Iat Automobile  Tjk Machinery

Almost no diversification

The 3 months correlation between Iat and Tjk is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Iat Automobile i.e., Iat Automobile and Tjk Machinery go up and down completely randomly.

Pair Corralation between Iat Automobile and Tjk Machinery

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 1.24 times more return on investment than Tjk Machinery. However, Iat Automobile is 1.24 times more volatile than Tjk Machinery Tianjin. It trades about 0.07 of its potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about 0.08 per unit of risk. If you would invest  962.00  in Iat Automobile Technology on September 22, 2024 and sell it today you would earn a total of  251.00  from holding Iat Automobile Technology or generate 26.09% return on investment over 90 days.

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

Iat Automobile Technology  vs.  Tjk Machinery Tianjin

Iat Automobile Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Tjk Machinery Tianjin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 11 (%) 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.

Pair Trading with Iat Automobile and Tjk Machinery

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

The idea behind Iat Automobile Technology and Tjk Machinery Tianjin 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.