Correlation Between Tianjin Capital and MARKET VECTR

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

Diversification Opportunities for Tianjin Capital and MARKET VECTR

0.55

Correlation Coefficient

Tianjin Capital  MARKET VECTR

Very weak diversification

The 3 months correlation between Tianjin and MARKET is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and MARKET VECTR go up and down completely randomly.

Pair Corralation between Tianjin Capital and MARKET VECTR

Assuming the 90 days horizon Tianjin Capital Environmental is expected to under-perform the MARKET VECTR. In addition to that, Tianjin Capital is 1.57 times more volatile than MARKET VECTR RETAIL. It trades about -0.07 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about -0.08 per unit of volatility. If you would invest  21,650  in MARKET VECTR RETAIL on December 30, 2024 and sell it today you would lose (1,050) from holding MARKET VECTR RETAIL or give up 4.85% of portfolio value over 90 days.

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

Tianjin Capital Environmental  vs.  MARKET VECTR RETAIL

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 fragile 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.

MARKET VECTR RETAIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MARKET VECTR RETAIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tianjin Capital and MARKET VECTR

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

The idea behind Tianjin Capital Environmental and MARKET VECTR RETAIL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.