Correlation Between Tianjin Capital and Nutrien

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

Diversification Opportunities for Tianjin Capital and Nutrien

0.01

Correlation Coefficient

Tianjin Capital  Nutrien

Significant diversification

The 3 months correlation between Tianjin and Nutrien is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Nutrien go up and down completely randomly.

Pair Corralation between Tianjin Capital and Nutrien

Assuming the 90 days horizon Tianjin Capital Environmental is expected to under-perform the Nutrien. But the stock apears to be less risky and, when comparing its historical volatility, Tianjin Capital Environmental is 1.4 times less risky than Nutrien. The stock trades about -0.07 of its potential returns per unit of risk. The Nutrien is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,171  in Nutrien on December 29, 2024 and sell it today you would earn a total of  539.00  from holding Nutrien or generate 12.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Tianjin Capital Environmental  vs.  Nutrien

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nutrien

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nutrien reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tianjin Capital and Nutrien

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

The idea behind Tianjin Capital Environmental and Nutrien 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.