Correlation Between Tianjin Ruixin and Hangzhou Minsheng

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

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

Diversification Opportunities for Tianjin Ruixin and Hangzhou Minsheng

0.81

Correlation Coefficient

Tianjin Ruixin  Hangzhou Minsheng

Very poor diversification

The 3 months correlation between Tianjin and Hangzhou is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Ruixin Technology and Hangzhou Minsheng Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Minsheng and Tianjin Ruixin 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 Ruixin Technology are associated (or correlated) with Hangzhou Minsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Minsheng has no effect on the direction of Tianjin Ruixin i.e., Tianjin Ruixin and Hangzhou Minsheng go up and down completely randomly.

Pair Corralation between Tianjin Ruixin and Hangzhou Minsheng

Assuming the 90 days trading horizon Tianjin Ruixin Technology is expected to generate 1.65 times more return on investment than Hangzhou Minsheng. However, Tianjin Ruixin is 1.65 times more volatile than Hangzhou Minsheng Healthcare. It trades about 0.07 of its potential returns per unit of risk. Hangzhou Minsheng Healthcare is currently generating about 0.01 per unit of risk. If you would invest  1,530  in Tianjin Ruixin Technology on December 25, 2024 and sell it today you would earn a total of  133.00  from holding Tianjin Ruixin Technology or generate 8.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Tianjin Ruixin Technology  vs.  Hangzhou Minsheng Healthcare

Tianjin Ruixin Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Ruixin Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Ruixin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hangzhou Minsheng

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tianjin Ruixin and Hangzhou Minsheng

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

The idea behind Tianjin Ruixin Technology and Hangzhou Minsheng Healthcare 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..