Correlation Between Touchstone International and Tianshan Aluminum

Can any of the company-specific risk be diversified away by investing in both Touchstone International and Tianshan Aluminum 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 Touchstone International and Tianshan Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Touchstone International and Tianshan Aluminum

0.56

Correlation Coefficient

Touchstone International  Tianshan Aluminum

Very weak diversification

The 3 months correlation between Touchstone and Tianshan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Medic and Tianshan Aluminum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianshan Aluminum and Touchstone International 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 Touchstone International Medical are associated (or correlated) with Tianshan Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianshan Aluminum has no effect on the direction of Touchstone International i.e., Touchstone International and Tianshan Aluminum go up and down completely randomly.

Pair Corralation between Touchstone International and Tianshan Aluminum

Assuming the 90 days trading horizon Touchstone International Medical is expected to under-perform the Tianshan Aluminum. In addition to that, Touchstone International is 1.28 times more volatile than Tianshan Aluminum Group. It trades about -0.31 of its total potential returns per unit of risk. Tianshan Aluminum Group is currently generating about 0.03 per unit of volatility. If you would invest  808.00  in Tianshan Aluminum Group on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Tianshan Aluminum Group or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Touchstone International Medic  vs.  Tianshan Aluminum Group

Touchstone International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tianshan Aluminum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianshan Aluminum Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tianshan Aluminum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Touchstone International and Tianshan Aluminum

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

The idea behind Touchstone International Medical and Tianshan Aluminum 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.