Correlation Between TIANDE CHEMICAL and ELECTRONIC ARTS

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

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

Diversification Opportunities for TIANDE CHEMICAL and ELECTRONIC ARTS

0.51

Correlation Coefficient

TIANDE CHEMICAL  ELECTRONIC ARTS

Very weak diversification

The 3 months correlation between TIANDE and ELECTRONIC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and ELECTRONIC ARTS go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and ELECTRONIC ARTS

If you would invest  7.25  in TIANDE CHEMICAL on October 15, 2024 and sell it today you would earn a total of  0.00  from holding TIANDE CHEMICAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

TIANDE CHEMICAL  vs.  ELECTRONIC ARTS

TIANDE CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

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 sound basic indicators, TIANDE CHEMICAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ELECTRONIC ARTS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ELECTRONIC ARTS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ELECTRONIC ARTS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TIANDE CHEMICAL and ELECTRONIC ARTS

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

The idea behind TIANDE CHEMICAL and ELECTRONIC ARTS 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.