Correlation Between ReTo Eco and TCJH Old

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

By analyzing existing cross correlation between ReTo Eco Solutions and TCJH Old, you can compare the effects of market volatilities on ReTo Eco and TCJH Old 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 ReTo Eco with a short position of TCJH Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReTo Eco and TCJH Old.

Diversification Opportunities for ReTo Eco and TCJH Old

0.35

Correlation Coefficient

ReTo Eco  TCJH Old

Weak diversification

The 3 months correlation between ReTo and TCJH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and TCJH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCJH Old and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with TCJH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCJH Old has no effect on the direction of ReTo Eco i.e., ReTo Eco and TCJH Old go up and down completely randomly.

Pair Corralation between ReTo Eco and TCJH Old

Given the investment horizon of 90 days ReTo Eco is expected to generate 1.67 times less return on investment than TCJH Old. But when comparing it to its historical volatility, ReTo Eco Solutions is 1.15 times less risky than TCJH Old. It trades about 0.03 of its potential returns per unit of risk. TCJH Old is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in TCJH Old on October 24, 2024 and sell it today you would earn a total of  32.00  from holding TCJH Old or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.23%
Values	Daily Returns

ReTo Eco Solutions  vs.  TCJH Old

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

TCJH Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCJH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ReTo Eco and TCJH Old

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

The idea behind ReTo Eco Solutions and TCJH Old 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.