Correlation Between Suzhou Weizhixiang and Tianjin LVYIN

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

By analyzing existing cross correlation between Suzhou Weizhixiang Food and Tianjin LVYIN Landscape, you can compare the effects of market volatilities on Suzhou Weizhixiang and Tianjin LVYIN 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 Suzhou Weizhixiang with a short position of Tianjin LVYIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Weizhixiang and Tianjin LVYIN.

Diversification Opportunities for Suzhou Weizhixiang and Tianjin LVYIN

0.7

Correlation Coefficient

Suzhou Weizhixiang  Tianjin LVYIN

Poor diversification

The 3 months correlation between Suzhou and Tianjin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Weizhixiang Food and Tianjin LVYIN Landscape in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin LVYIN Landscape and Suzhou Weizhixiang 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 Suzhou Weizhixiang Food are associated (or correlated) with Tianjin LVYIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin LVYIN Landscape has no effect on the direction of Suzhou Weizhixiang i.e., Suzhou Weizhixiang and Tianjin LVYIN go up and down completely randomly.

Pair Corralation between Suzhou Weizhixiang and Tianjin LVYIN

Assuming the 90 days trading horizon Suzhou Weizhixiang Food is expected to under-perform the Tianjin LVYIN. In addition to that, Suzhou Weizhixiang is 1.15 times more volatile than Tianjin LVYIN Landscape. It trades about -0.05 of its total potential returns per unit of risk. Tianjin LVYIN Landscape is currently generating about 0.08 per unit of volatility. If you would invest  695.00  in Tianjin LVYIN Landscape on December 25, 2024 and sell it today you would earn a total of  61.00  from holding Tianjin LVYIN Landscape or generate 8.78% return on investment over 90 days.

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

Suzhou Weizhixiang Food  vs.  Tianjin LVYIN Landscape

Suzhou Weizhixiang Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suzhou Weizhixiang Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tianjin LVYIN Landscape

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin LVYIN Landscape are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin LVYIN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Suzhou Weizhixiang and Tianjin LVYIN

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

The idea behind Suzhou Weizhixiang Food and Tianjin LVYIN Landscape 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..