Correlation Between Tinavi Medical and Leaguer Shenzhen

Can any of the company-specific risk be diversified away by investing in both Tinavi Medical and Leaguer Shenzhen 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 Tinavi Medical and Leaguer Shenzhen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tinavi Medical Technologies and Leaguer Shenzhen MicroElectronics, you can compare the effects of market volatilities on Tinavi Medical and Leaguer Shenzhen 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 Tinavi Medical with a short position of Leaguer Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinavi Medical and Leaguer Shenzhen.

Diversification Opportunities for Tinavi Medical and Leaguer Shenzhen

0.68

Correlation Coefficient

Tinavi Medical  Leaguer Shenzhen

Poor diversification

The 3 months correlation between Tinavi and Leaguer is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tinavi Medical Technologies and Leaguer Shenzhen MicroElectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaguer Shenzhen Mic and Tinavi Medical 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 Tinavi Medical Technologies are associated (or correlated) with Leaguer Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaguer Shenzhen Mic has no effect on the direction of Tinavi Medical i.e., Tinavi Medical and Leaguer Shenzhen go up and down completely randomly.

Pair Corralation between Tinavi Medical and Leaguer Shenzhen

Assuming the 90 days trading horizon Tinavi Medical Technologies is expected to generate 1.56 times more return on investment than Leaguer Shenzhen. However, Tinavi Medical is 1.56 times more volatile than Leaguer Shenzhen MicroElectronics. It trades about 0.1 of its potential returns per unit of risk. Leaguer Shenzhen MicroElectronics is currently generating about -0.03 per unit of risk. If you would invest  1,064  in Tinavi Medical Technologies on December 25, 2024 and sell it today you would earn a total of  204.00  from holding Tinavi Medical Technologies or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Tinavi Medical Technologies  vs.  Leaguer Shenzhen MicroElectron

Tinavi Medical Techn

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tinavi Medical Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tinavi Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Leaguer Shenzhen Mic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tinavi Medical and Leaguer Shenzhen

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

The idea behind Tinavi Medical Technologies and Leaguer Shenzhen MicroElectronics 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..