Correlation Between Tianjin Capital and BRAEMAR HOTELS

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

Diversification Opportunities for Tianjin Capital and BRAEMAR HOTELS

0.15

Correlation Coefficient

Tianjin Capital  BRAEMAR HOTELS

Average diversification

The 3 months correlation between Tianjin and BRAEMAR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES 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 BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and BRAEMAR HOTELS go up and down completely randomly.

Pair Corralation between Tianjin Capital and BRAEMAR HOTELS

Assuming the 90 days horizon Tianjin Capital is expected to generate 1.03 times less return on investment than BRAEMAR HOTELS. But when comparing it to its historical volatility, Tianjin Capital Environmental is 2.74 times less risky than BRAEMAR HOTELS. It trades about 0.03 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  255.00  in BRAEMAR HOTELS RES on October 25, 2024 and sell it today you would lose (7.00) from holding BRAEMAR HOTELS RES or give up 2.75% of portfolio value over 90 days.

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

Tianjin Capital Environmental  vs.  BRAEMAR HOTELS RES

Tianjin Capital Envi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tianjin Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BRAEMAR HOTELS RES

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRAEMAR HOTELS RES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BRAEMAR HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tianjin Capital and BRAEMAR HOTELS

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

The idea behind Tianjin Capital Environmental and BRAEMAR HOTELS RES 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.