Correlation Between Tianjin Capital and DALATA HOTEL

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

Diversification Opportunities for Tianjin Capital and DALATA HOTEL

0.0

Correlation Coefficient

Tianjin Capital  DALATA HOTEL

Pay attention - limited upside

The 3 months correlation between Tianjin and DALATA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and DALATA HOTEL go up and down completely randomly.

Pair Corralation between Tianjin Capital and DALATA HOTEL

Assuming the 90 days horizon Tianjin Capital is expected to generate 29.61 times less return on investment than DALATA HOTEL. But when comparing it to its historical volatility, Tianjin Capital Environmental is 1.42 times less risky than DALATA HOTEL. It trades about 0.01 of its potential returns per unit of risk. DALATA HOTEL is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  421.00  in DALATA HOTEL on December 11, 2024 and sell it today you would earn a total of  86.00  from holding DALATA HOTEL or generate 20.43% return on investment over 90 days.

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

Tianjin Capital Environmental  vs.  DALATA HOTEL

Tianjin Capital Envi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tianjin Capital Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

DALATA HOTEL

Risk-Adjusted Performance

Good

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

Pair Trading with Tianjin Capital and DALATA HOTEL

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

The idea behind Tianjin Capital Environmental and DALATA HOTEL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.