Correlation Between Caseys General and Tianjin Capital

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

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

Diversification Opportunities for Caseys General and Tianjin Capital

0.38

Correlation Coefficient

Caseys General  Tianjin Capital

Weak diversification

The 3 months correlation between Caseys and Tianjin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores 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 Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Tianjin Capital go up and down completely randomly.

Pair Corralation between Caseys General and Tianjin Capital

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 1.24 times more return on investment than Tianjin Capital. However, Caseys General is 1.24 times more volatile than Tianjin Capital Environmental. It trades about 0.04 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.07 per unit of risk. If you would invest  38,352  in Caseys General Stores on December 30, 2024 and sell it today you would earn a total of  1,448  from holding Caseys General Stores or generate 3.78% return on investment over 90 days.

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

Caseys General Stores  vs.  Tianjin Capital Environmental

Caseys General Stores

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caseys General 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

Very Weak

Over the last 90 days Tianjin Capital Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Caseys General and Tianjin Capital

The main advantage of trading using opposite Caseys General and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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 Caseys General Stores 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.