Correlation Between Tianjin Songjiang and Eastern Air

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

By analyzing existing cross correlation between Tianjin Songjiang Co and Eastern Air Logistics, you can compare the effects of market volatilities on Tianjin Songjiang and Eastern Air 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 Songjiang with a short position of Eastern Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Songjiang and Eastern Air.

Diversification Opportunities for Tianjin Songjiang and Eastern Air

0.43

Correlation Coefficient

Tianjin Songjiang  Eastern Air

Very weak diversification

The 3 months correlation between Tianjin and Eastern is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Songjiang Co and Eastern Air Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Air Logistics and Tianjin Songjiang 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 Songjiang Co are associated (or correlated) with Eastern Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Air Logistics has no effect on the direction of Tianjin Songjiang i.e., Tianjin Songjiang and Eastern Air go up and down completely randomly.

Pair Corralation between Tianjin Songjiang and Eastern Air

Assuming the 90 days trading horizon Tianjin Songjiang Co is expected to under-perform the Eastern Air. But the stock apears to be less risky and, when comparing its historical volatility, Tianjin Songjiang Co is 1.86 times less risky than Eastern Air. The stock trades about -0.32 of its potential returns per unit of risk. The Eastern Air Logistics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,684  in Eastern Air Logistics on October 23, 2024 and sell it today you would earn a total of  80.00  from holding Eastern Air Logistics or generate 4.75% return on investment over 90 days.

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

Tianjin Songjiang Co  vs.  Eastern Air Logistics

Tianjin Songjiang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianjin Songjiang Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eastern Air Logistics

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Tianjin Songjiang and Eastern Air

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

The idea behind Tianjin Songjiang Co and Eastern Air Logistics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.