Correlation Between Crawford and Tian Ruixiang

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

By analyzing existing cross correlation between Crawford Company and Tian Ruixiang Holdings, you can compare the effects of market volatilities on Crawford and Tian Ruixiang 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 Crawford with a short position of Tian Ruixiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crawford and Tian Ruixiang.

Diversification Opportunities for Crawford and Tian Ruixiang

0.2

Correlation Coefficient

Crawford  Tian Ruixiang

Modest diversification

The 3 months correlation between Crawford and Tian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and Tian Ruixiang Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tian Ruixiang Holdings and Crawford 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 Crawford Company are associated (or correlated) with Tian Ruixiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tian Ruixiang Holdings has no effect on the direction of Crawford i.e., Crawford and Tian Ruixiang go up and down completely randomly.

Pair Corralation between Crawford and Tian Ruixiang

Assuming the 90 days horizon Crawford Company is expected to generate 0.59 times more return on investment than Tian Ruixiang. However, Crawford Company is 1.68 times less risky than Tian Ruixiang. It trades about -0.01 of its potential returns per unit of risk. Tian Ruixiang Holdings is currently generating about -0.09 per unit of risk. If you would invest  1,160  in Crawford Company on December 29, 2024 and sell it today you would lose (52.00) from holding Crawford Company or give up 4.48% of portfolio value over 90 days.

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

Crawford Company  vs.  Tian Ruixiang Holdings

Crawford

Risk-Adjusted Performance

Very Weak

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

Tian Ruixiang Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tian Ruixiang Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Crawford and Tian Ruixiang

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

The idea behind Crawford Company and Tian Ruixiang Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.