Correlation Between BC IRON and Tianjin Capital

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

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

Diversification Opportunities for BC IRON and Tianjin Capital

-0.71

Correlation Coefficient

BC IRON  Tianjin Capital

Pay attention - limited upside

The 3 months correlation between BC3 and Tianjin is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi and BC IRON 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 BC IRON are associated (or correlated) with Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of BC IRON i.e., BC IRON and Tianjin Capital go up and down completely randomly.

Pair Corralation between BC IRON and Tianjin Capital

Assuming the 90 days trading horizon BC IRON is expected to under-perform the Tianjin Capital. In addition to that, BC IRON is 1.58 times more volatile than Tianjin Capital Environmental. It trades about -0.02 of its total potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.03 per unit of volatility. If you would invest  37.00  in Tianjin Capital Environmental on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Tianjin Capital Environmental or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BC IRON  vs.  Tianjin Capital Environmental

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BC IRON is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tianjin Capital Envi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tianjin Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BC IRON and Tianjin Capital

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

The idea behind BC IRON and Tianjin Capital Environmental 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.