Correlation Between Sichuan Tianqi and Jiangsu Zhongtian
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By analyzing existing cross correlation between Sichuan Tianqi Lithium and Jiangsu Zhongtian Technology, you can compare the effects of market volatilities on Sichuan Tianqi and Jiangsu Zhongtian 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 Sichuan Tianqi with a short position of Jiangsu Zhongtian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Tianqi and Jiangsu Zhongtian.
Diversification Opportunities for Sichuan Tianqi and Jiangsu Zhongtian
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sichuan and Jiangsu is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Tianqi Lithium and Jiangsu Zhongtian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Zhongtian and Sichuan Tianqi 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 Sichuan Tianqi Lithium are associated (or correlated) with Jiangsu Zhongtian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Zhongtian has no effect on the direction of Sichuan Tianqi i.e., Sichuan Tianqi and Jiangsu Zhongtian go up and down completely randomly.
Pair Corralation between Sichuan Tianqi and Jiangsu Zhongtian
Assuming the 90 days trading horizon Sichuan Tianqi Lithium is expected to under-perform the Jiangsu Zhongtian. In addition to that, Sichuan Tianqi is 1.13 times more volatile than Jiangsu Zhongtian Technology. It trades about -0.37 of its total potential returns per unit of risk. Jiangsu Zhongtian Technology is currently generating about -0.09 per unit of volatility. If you would invest 1,565 in Jiangsu Zhongtian Technology on September 26, 2024 and sell it today you would lose (54.00) from holding Jiangsu Zhongtian Technology or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Tianqi Lithium vs. Jiangsu Zhongtian Technology
Performance |
| Timeline |
| Sichuan Tianqi Lithium |
| Jiangsu Zhongtian |
Sichuan Tianqi and Jiangsu Zhongtian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Tianqi and Jiangsu Zhongtian
The main advantage of trading using opposite Sichuan Tianqi and Jiangsu Zhongtian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Tianqi position performs unexpectedly, Jiangsu Zhongtian 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 Jiangsu Zhongtian will offset losses from the drop in Jiangsu Zhongtian's long position.| Sichuan Tianqi vs. Zijin Mining Group | Sichuan Tianqi vs. Baoshan Iron Steel | Sichuan Tianqi vs. Shandong Gold Mining | Sichuan Tianqi vs. Rongsheng Petrochemical Co |
| Jiangsu Zhongtian vs. Kweichow Moutai Co | Jiangsu Zhongtian vs. Contemporary Amperex Technology | Jiangsu Zhongtian vs. G bits Network Technology | Jiangsu Zhongtian vs. BYD Co Ltd |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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