Correlation Between Tacheng Real and Amulaire Thermal

Can any of the company-specific risk be diversified away by investing in both Tacheng Real and Amulaire Thermal 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 Tacheng Real and Amulaire Thermal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tacheng Real Estate and Amulaire Thermal Technology, you can compare the effects of market volatilities on Tacheng Real and Amulaire Thermal 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 Tacheng Real with a short position of Amulaire Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tacheng Real and Amulaire Thermal.

Diversification Opportunities for Tacheng Real and Amulaire Thermal

0.51

Correlation Coefficient

Tacheng Real  Amulaire Thermal

Very weak diversification

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

Pair Corralation between Tacheng Real and Amulaire Thermal

Assuming the 90 days trading horizon Tacheng Real is expected to generate 124.52 times less return on investment than Amulaire Thermal. But when comparing it to its historical volatility, Tacheng Real Estate is 1.87 times less risky than Amulaire Thermal. It trades about 0.0 of its potential returns per unit of risk. Amulaire Thermal Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,780  in Amulaire Thermal Technology on December 25, 2024 and sell it today you would earn a total of  420.00  from holding Amulaire Thermal Technology or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Tacheng Real Estate  vs.  Amulaire Thermal Technology

Tacheng Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tacheng Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tacheng Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Amulaire Thermal Tec

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amulaire Thermal Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Amulaire Thermal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tacheng Real and Amulaire Thermal

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

The idea behind Tacheng Real Estate and Amulaire Thermal 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.

Check out your portfolio center.

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.