Correlation Between Sichuan Tianqi and China Enterprise
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By analyzing existing cross correlation between Sichuan Tianqi Lithium and China Enterprise Co, you can compare the effects of market volatilities on Sichuan Tianqi and China Enterprise 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 China Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Tianqi and China Enterprise.
Diversification Opportunities for Sichuan Tianqi and China Enterprise
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sichuan and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Tianqi Lithium and China Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Enterprise 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 China Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Enterprise has no effect on the direction of Sichuan Tianqi i.e., Sichuan Tianqi and China Enterprise go up and down completely randomly.
Pair Corralation between Sichuan Tianqi and China Enterprise
Assuming the 90 days trading horizon Sichuan Tianqi Lithium is expected to under-perform the China Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Sichuan Tianqi Lithium is 2.0 times less risky than China Enterprise. The stock trades about -0.39 of its potential returns per unit of risk. The China Enterprise Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 296.00 in China Enterprise Co on September 28, 2024 and sell it today you would lose (11.00) from holding China Enterprise Co or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Tianqi Lithium vs. China Enterprise Co
Performance |
| Timeline |
| Sichuan Tianqi Lithium |
| China Enterprise |
Sichuan Tianqi and China Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Tianqi and China Enterprise
The main advantage of trading using opposite Sichuan Tianqi and China Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Tianqi position performs unexpectedly, China Enterprise 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 China Enterprise will offset losses from the drop in China Enterprise'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 |
| China Enterprise vs. INKON Life Technology | China Enterprise vs. Chahua Modern Housewares | China Enterprise vs. Anhui Deli Household | China Enterprise vs. China World Trade |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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