Correlation Between GreenTech Environmental and Tianjin Silvery

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

By analyzing existing cross correlation between GreenTech Environmental Co and Tianjin Silvery Dragon, you can compare the effects of market volatilities on GreenTech Environmental and Tianjin Silvery 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 GreenTech Environmental with a short position of Tianjin Silvery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTech Environmental and Tianjin Silvery.

Diversification Opportunities for GreenTech Environmental and Tianjin Silvery

0.89

Correlation Coefficient

GreenTech Environmental  Tianjin Silvery

Very poor diversification

The 3 months correlation between GreenTech and Tianjin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Tianjin Silvery Dragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Silvery Dragon and GreenTech Environmental 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 GreenTech Environmental Co are associated (or correlated) with Tianjin Silvery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Silvery Dragon has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Tianjin Silvery go up and down completely randomly.

Pair Corralation between GreenTech Environmental and Tianjin Silvery

Assuming the 90 days trading horizon GreenTech Environmental is expected to generate 1.14 times less return on investment than Tianjin Silvery. In addition to that, GreenTech Environmental is 1.25 times more volatile than Tianjin Silvery Dragon. It trades about 0.03 of its total potential returns per unit of risk. Tianjin Silvery Dragon is currently generating about 0.04 per unit of volatility. If you would invest  479.00  in Tianjin Silvery Dragon on September 19, 2024 and sell it today you would earn a total of  162.00  from holding Tianjin Silvery Dragon or generate 33.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

GreenTech Environmental Co  vs.  Tianjin Silvery Dragon

GreenTech Environmental

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTech Environmental Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GreenTech Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Silvery Dragon

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Silvery Dragon are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Silvery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenTech Environmental and Tianjin Silvery

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

The idea behind GreenTech Environmental Co and Tianjin Silvery Dragon 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 CEOs Directory module to screen CEOs from public companies around the world.