Correlation Between Tienlen Steel and Investment

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

By analyzing existing cross correlation between Tienlen Steel Corp and Investment And Construction, you can compare the effects of market volatilities on Tienlen Steel and Investment 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 Tienlen Steel with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Investment.

Diversification Opportunities for Tienlen Steel and Investment

0.89

Correlation Coefficient

Tienlen Steel  Investment

Very poor diversification

The 3 months correlation between Tienlen and Investment is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Investment And Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment And Const and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment And Const has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Investment go up and down completely randomly.

Pair Corralation between Tienlen Steel and Investment

Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Investment. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 2.39 times less risky than Investment. The stock trades about -0.03 of its potential returns per unit of risk. The Investment And Construction is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  390,000  in Investment And Construction on October 11, 2024 and sell it today you would earn a total of  620,000  from holding Investment And Construction or generate 158.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.09%
Values	Daily Returns

Tienlen Steel Corp  vs.  Investment And Construction

Tienlen Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tienlen Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Investment And Const

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment And Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tienlen Steel and Investment

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

The idea behind Tienlen Steel Corp and Investment And Construction 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.