Correlation Between TIANDE CHEMICAL and Healthequity

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

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

Diversification Opportunities for TIANDE CHEMICAL and Healthequity

0.71

Correlation Coefficient

TIANDE CHEMICAL  Healthequity

Poor diversification

The 3 months correlation between TIANDE and Healthequity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity and TIANDE CHEMICAL 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 TIANDE CHEMICAL are associated (or correlated) with Healthequity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthequity has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and Healthequity go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and Healthequity

Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 2.01 times more return on investment than Healthequity. However, TIANDE CHEMICAL is 2.01 times more volatile than Healthequity. It trades about 0.13 of its potential returns per unit of risk. Healthequity is currently generating about 0.16 per unit of risk. If you would invest  5.25  in TIANDE CHEMICAL on October 5, 2024 and sell it today you would earn a total of  2.00  from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.

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

TIANDE CHEMICAL  vs.  Healthequity

TIANDE CHEMICAL

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days TIANDE CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, TIANDE CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Healthequity

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Healthequity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, Healthequity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIANDE CHEMICAL and Healthequity

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

The idea behind TIANDE CHEMICAL and Healthequity 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..