Correlation Between China Tontine and Tarena International

Can any of the company-specific risk be diversified away by investing in both China Tontine and Tarena International 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 China Tontine and Tarena International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Tontine Wines and Tarena International, you can compare the effects of market volatilities on China Tontine and Tarena International 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 China Tontine with a short position of Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and Tarena International.

Diversification Opportunities for China Tontine and Tarena International

0.0

Correlation Coefficient

China Tontine  Tarena International

Pay attention - limited upside

The 3 months correlation between China and Tarena is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International and China Tontine 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 China Tontine Wines are associated (or correlated) with Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of China Tontine i.e., China Tontine and Tarena International go up and down completely randomly.

Pair Corralation between China Tontine and Tarena International

If you would invest  68.00  in Tarena International on December 28, 2024 and sell it today you would lose (30.00) from holding Tarena International or give up 44.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

China Tontine Wines  vs.  Tarena International

China Tontine Wines

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Tontine Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Tontine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tarena International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tarena International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Tarena International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Tontine and Tarena International

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

The idea behind China Tontine Wines and Tarena International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.