Correlation Between Tianjin Capital and Fastly

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

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

Diversification Opportunities for Tianjin Capital and Fastly

0.45

Correlation Coefficient

Tianjin Capital  Fastly

Very weak diversification

The 3 months correlation between Tianjin and Fastly is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Fastly Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly Inc and Tianjin Capital 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 Tianjin Capital Environmental are associated (or correlated) with Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Fastly go up and down completely randomly.

Pair Corralation between Tianjin Capital and Fastly

Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.45 times more return on investment than Fastly. However, Tianjin Capital Environmental is 2.23 times less risky than Fastly. It trades about 0.01 of its potential returns per unit of risk. Fastly Inc is currently generating about -0.14 per unit of risk. If you would invest  39.00  in Tianjin Capital Environmental on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Tianjin Capital Environmental or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Tianjin Capital Environmental  vs.  Fastly Inc

Tianjin Capital Envi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tianjin Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fastly Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fastly unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tianjin Capital and Fastly

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

The idea behind Tianjin Capital Environmental and Fastly Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.