Correlation Between Sublime China and Tianjin Yiyi

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

By analyzing existing cross correlation between Sublime China Information and Tianjin Yiyi Hygiene, you can compare the effects of market volatilities on Sublime China and Tianjin Yiyi 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 Sublime China with a short position of Tianjin Yiyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sublime China and Tianjin Yiyi.

Diversification Opportunities for Sublime China and Tianjin Yiyi

0.36

Correlation Coefficient

Sublime China  Tianjin Yiyi

Weak diversification

The 3 months correlation between Sublime and Tianjin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sublime China Information and Tianjin Yiyi Hygiene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Yiyi Hygiene and Sublime China 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 Sublime China Information are associated (or correlated) with Tianjin Yiyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Yiyi Hygiene has no effect on the direction of Sublime China i.e., Sublime China and Tianjin Yiyi go up and down completely randomly.

Pair Corralation between Sublime China and Tianjin Yiyi

Assuming the 90 days trading horizon Sublime China is expected to generate 1.75 times less return on investment than Tianjin Yiyi. In addition to that, Sublime China is 1.38 times more volatile than Tianjin Yiyi Hygiene. It trades about 0.06 of its total potential returns per unit of risk. Tianjin Yiyi Hygiene is currently generating about 0.15 per unit of volatility. If you would invest  1,393  in Tianjin Yiyi Hygiene on October 12, 2024 and sell it today you would earn a total of  396.00  from holding Tianjin Yiyi Hygiene or generate 28.43% return on investment over 90 days.

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

Sublime China Information  vs.  Tianjin Yiyi Hygiene

Sublime China Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sublime China Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sublime China sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Yiyi Hygiene

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Yiyi Hygiene are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Yiyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sublime China and Tianjin Yiyi

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

The idea behind Sublime China Information and Tianjin Yiyi Hygiene 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.