Correlation Between CHINA TONTINE and Waste Management

Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on CHINA TONTINE and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Waste Management.

Diversification Opportunities for CHINA TONTINE and Waste Management

0.0

Correlation Coefficient

CHINA TONTINE  Waste Management

Pay attention - limited upside

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

Pair Corralation between CHINA TONTINE and Waste Management

If you would invest  19,730  in Waste Management on September 26, 2024 and sell it today you would lose (258.00) from holding Waste Management or give up 1.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CHINA TONTINE WINES  vs.  Waste Management

CHINA TONTINE WINES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Waste Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Waste Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA TONTINE and Waste Management

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

The idea behind CHINA TONTINE WINES and Waste Management 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.