Correlation Between Tianjin Capital and Northann Corp

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

Diversification Opportunities for Tianjin Capital and Northann Corp

0.62

Correlation Coefficient

Tianjin Capital  Northann Corp

Poor diversification

The 3 months correlation between Tianjin and Northann is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann Corp 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 Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Northann Corp go up and down completely randomly.

Pair Corralation between Tianjin Capital and Northann Corp

Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.54 times more return on investment than Northann Corp. However, Tianjin Capital Environmental is 1.85 times less risky than Northann Corp. It trades about 0.06 of its potential returns per unit of risk. Northann Corp is currently generating about 0.01 per unit of risk. If you would invest  9.93  in Tianjin Capital Environmental on October 26, 2024 and sell it today you would earn a total of  28.07  from holding Tianjin Capital Environmental or generate 282.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.3%
Values	Daily Returns

Tianjin Capital Environmental  vs.  Northann Corp

Tianjin Capital Envi

Risk-Adjusted Performance

0 of 100

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 forward indicators, Tianjin Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Northann Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northann Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Northann Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tianjin Capital and Northann Corp

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

The idea behind Tianjin Capital Environmental and Northann Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.