Correlation Between Tianjin You and Eastroc Beverage

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

By analyzing existing cross correlation between Tianjin You Fa and Eastroc Beverage Group, you can compare the effects of market volatilities on Tianjin You and Eastroc Beverage 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 You with a short position of Eastroc Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin You and Eastroc Beverage.

Diversification Opportunities for Tianjin You and Eastroc Beverage

-0.51

Correlation Coefficient

Tianjin You  Eastroc Beverage

Excellent diversification

The 3 months correlation between Tianjin and Eastroc is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin You Fa and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage and Tianjin You 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 You Fa are associated (or correlated) with Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of Tianjin You i.e., Tianjin You and Eastroc Beverage go up and down completely randomly.

Pair Corralation between Tianjin You and Eastroc Beverage

Assuming the 90 days trading horizon Tianjin You Fa is expected to generate 0.46 times more return on investment than Eastroc Beverage. However, Tianjin You Fa is 2.16 times less risky than Eastroc Beverage. It trades about 0.01 of its potential returns per unit of risk. Eastroc Beverage Group is currently generating about -0.03 per unit of risk. If you would invest  567.00  in Tianjin You Fa on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Tianjin You Fa or generate 0.0% return on investment over 90 days.

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

Tianjin You Fa  vs.  Eastroc Beverage Group

Tianjin You Fa

Risk-Adjusted Performance

Very Weak

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

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastroc Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eastroc Beverage 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 You and Eastroc Beverage

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

The idea behind Tianjin You Fa and Eastroc Beverage Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.