Correlation Between Sichuan Tianwei and HaiXin Foods

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Sichuan Tianwei and HaiXin Foods 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 Sichuan Tianwei and HaiXin Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sichuan Tianwei Electronic and HaiXin Foods Co, you can compare the effects of market volatilities on Sichuan Tianwei and HaiXin Foods 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 Sichuan Tianwei with a short position of HaiXin Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Tianwei and HaiXin Foods.

Diversification Opportunities for Sichuan Tianwei and HaiXin Foods

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Sichuan and HaiXin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Tianwei Electronic and HaiXin Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HaiXin Foods and Sichuan Tianwei 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 Sichuan Tianwei Electronic are associated (or correlated) with HaiXin Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HaiXin Foods has no effect on the direction of Sichuan Tianwei i.e., Sichuan Tianwei and HaiXin Foods go up and down completely randomly.

Pair Corralation between Sichuan Tianwei and HaiXin Foods

Assuming the 90 days trading horizon Sichuan Tianwei Electronic is expected to under-perform the HaiXin Foods. In addition to that, Sichuan Tianwei is 1.26 times more volatile than HaiXin Foods Co. It trades about -0.02 of its total potential returns per unit of risk. HaiXin Foods Co is currently generating about -0.01 per unit of volatility. If you would invest  610.00  in HaiXin Foods Co on October 24, 2024 and sell it today you would lose (187.00) from holding HaiXin Foods Co or give up 30.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sichuan Tianwei Electronic  vs.  HaiXin Foods Co

 Performance 
       Timeline  
Sichuan Tianwei Elec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sichuan Tianwei Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
HaiXin Foods 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in HaiXin Foods Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HaiXin Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Sichuan Tianwei and HaiXin Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sichuan Tianwei and HaiXin Foods

The main advantage of trading using opposite Sichuan Tianwei and HaiXin Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Tianwei position performs unexpectedly, HaiXin Foods 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 HaiXin Foods will offset losses from the drop in HaiXin Foods' long position.
The idea behind Sichuan Tianwei Electronic and HaiXin Foods Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Money Managers
Screen money managers from public funds and ETFs managed around the world
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
FinTech Suite
Use AI to screen and filter profitable investment opportunities