Correlation Between Shaanxi Broadcast and Tongding Interconnection

Can any of the company-specific risk be diversified away by investing in both Shaanxi Broadcast and Tongding Interconnection 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 Shaanxi Broadcast and Tongding Interconnection into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shaanxi Broadcast TV and Tongding Interconnection Information, you can compare the effects of market volatilities on Shaanxi Broadcast and Tongding Interconnection 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 Shaanxi Broadcast with a short position of Tongding Interconnection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Tongding Interconnection.

Diversification Opportunities for Shaanxi Broadcast and Tongding Interconnection

0.63

Correlation Coefficient

Shaanxi Broadcast  Tongding Interconnection

Poor diversification

The 3 months correlation between Shaanxi and Tongding is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Tongding Interconnection Infor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongding Interconnection and Shaanxi Broadcast 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 Shaanxi Broadcast TV are associated (or correlated) with Tongding Interconnection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongding Interconnection has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Tongding Interconnection go up and down completely randomly.

Pair Corralation between Shaanxi Broadcast and Tongding Interconnection

Assuming the 90 days trading horizon Shaanxi Broadcast TV is expected to under-perform the Tongding Interconnection. But the stock apears to be less risky and, when comparing its historical volatility, Shaanxi Broadcast TV is 1.04 times less risky than Tongding Interconnection. The stock trades about -0.05 of its potential returns per unit of risk. The Tongding Interconnection Information is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  482.00  in Tongding Interconnection Information on October 13, 2024 and sell it today you would lose (67.00) from holding Tongding Interconnection Information or give up 13.9% of portfolio value over 90 days.

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

Shaanxi Broadcast TV  vs.  Tongding Interconnection Infor

Shaanxi Broadcast

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Broadcast TV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shaanxi Broadcast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tongding Interconnection

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Shaanxi Broadcast and Tongding Interconnection

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

The idea behind Shaanxi Broadcast TV and Tongding Interconnection Information 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.