Correlation Between Tongxin International and Arhaus

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

By analyzing existing cross correlation between Tongxin International and Arhaus Inc, you can compare the effects of market volatilities on Tongxin International and Arhaus 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 Tongxin International with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxin International and Arhaus.

Diversification Opportunities for Tongxin International and Arhaus

0.0

Correlation Coefficient

Tongxin International  Arhaus

Pay attention - limited upside

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

Pair Corralation between Tongxin International and Arhaus

If you would invest  909.00  in Arhaus Inc on December 19, 2024 and sell it today you would lose (14.00) from holding Arhaus Inc or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Tongxin International  vs.  Arhaus Inc

Tongxin International

Risk-Adjusted Performance

Very Weak

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

Arhaus Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tongxin International and Arhaus

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

The idea behind Tongxin International and Arhaus Inc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.