Correlation Between Guangdong Jingyi and Tianjin Capital
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By analyzing existing cross correlation between Guangdong Jingyi Metal and Tianjin Capital Environmental, you can compare the effects of market volatilities on Guangdong Jingyi and Tianjin Capital 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 Guangdong Jingyi with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Tianjin Capital.
Diversification Opportunities for Guangdong Jingyi and Tianjin Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Tianjin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Tianjin Capital go up and down completely randomly.
Pair Corralation between Guangdong Jingyi and Tianjin Capital
Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 2.28 times more return on investment than Tianjin Capital. However, Guangdong Jingyi is 2.28 times more volatile than Tianjin Capital Environmental. It trades about 0.17 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.23 per unit of risk. If you would invest 669.00 in Guangdong Jingyi Metal on October 30, 2024 and sell it today you would earn a total of 60.00 from holding Guangdong Jingyi Metal or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jingyi Metal vs. Tianjin Capital Environmental
Performance |
| Timeline |
| Guangdong Jingyi Metal |
| Tianjin Capital Envi |
Guangdong Jingyi and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jingyi and Tianjin Capital
The main advantage of trading using opposite Guangdong Jingyi and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.The idea behind Guangdong Jingyi Metal and Tianjin Capital Environmental 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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Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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