Correlation Between Tianneng Battery and Digiwin Software

Can any of the company-specific risk be diversified away by investing in both Tianneng Battery and Digiwin Software 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 Tianneng Battery and Digiwin Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianneng Battery Group and Digiwin Software Co, you can compare the effects of market volatilities on Tianneng Battery and Digiwin Software 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 Tianneng Battery with a short position of Digiwin Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianneng Battery and Digiwin Software.

Diversification Opportunities for Tianneng Battery and Digiwin Software

-0.3

Correlation Coefficient

Tianneng Battery  Digiwin Software

Very good diversification

The 3 months correlation between Tianneng and Digiwin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tianneng Battery Group and Digiwin Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digiwin Software and Tianneng Battery 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 Tianneng Battery Group are associated (or correlated) with Digiwin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digiwin Software has no effect on the direction of Tianneng Battery i.e., Tianneng Battery and Digiwin Software go up and down completely randomly.

Pair Corralation between Tianneng Battery and Digiwin Software

Assuming the 90 days trading horizon Tianneng Battery Group is expected to under-perform the Digiwin Software. But the stock apears to be less risky and, when comparing its historical volatility, Tianneng Battery Group is 1.75 times less risky than Digiwin Software. The stock trades about -0.02 of its potential returns per unit of risk. The Digiwin Software Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,597  in Digiwin Software Co on October 4, 2024 and sell it today you would earn a total of  990.00  from holding Digiwin Software Co or generate 61.99% return on investment over 90 days.

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

Tianneng Battery Group  vs.  Digiwin Software Co

Tianneng Battery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianneng Battery Group 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.

Digiwin Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tianneng Battery and Digiwin Software

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

The idea behind Tianneng Battery Group and Digiwin Software 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.