Correlation Between Tengda Construction and Allgens Medical

Can any of the company-specific risk be diversified away by investing in both Tengda Construction and Allgens Medical 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 Tengda Construction and Allgens Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tengda Construction Group and Allgens Medical Technology, you can compare the effects of market volatilities on Tengda Construction and Allgens Medical 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 Tengda Construction with a short position of Allgens Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tengda Construction and Allgens Medical.

Diversification Opportunities for Tengda Construction and Allgens Medical

0.84

Correlation Coefficient

Tengda Construction  Allgens Medical

Very poor diversification

The 3 months correlation between Tengda and Allgens is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tengda Construction Group and Allgens Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allgens Medical Tech and Tengda Construction 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 Tengda Construction Group are associated (or correlated) with Allgens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allgens Medical Tech has no effect on the direction of Tengda Construction i.e., Tengda Construction and Allgens Medical go up and down completely randomly.

Pair Corralation between Tengda Construction and Allgens Medical

Assuming the 90 days trading horizon Tengda Construction Group is expected to generate 0.83 times more return on investment than Allgens Medical. However, Tengda Construction Group is 1.2 times less risky than Allgens Medical. It trades about -0.05 of its potential returns per unit of risk. Allgens Medical Technology is currently generating about -0.13 per unit of risk. If you would invest  242.00  in Tengda Construction Group on December 25, 2024 and sell it today you would lose (10.00) from holding Tengda Construction Group or give up 4.13% of portfolio value over 90 days.

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

Tengda Construction Group  vs.  Allgens Medical Technology

Tengda Construction

Risk-Adjusted Performance

Very Weak

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

Allgens Medical Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allgens Medical Technology 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tengda Construction and Allgens Medical

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

The idea behind Tengda Construction Group and Allgens Medical Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.