Correlation Between Tongyu Communication and Xian International
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By analyzing existing cross correlation between Tongyu Communication and Xian International Medical, you can compare the effects of market volatilities on Tongyu Communication and Xian International 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 Tongyu Communication with a short position of Xian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongyu Communication and Xian International.
Diversification Opportunities for Tongyu Communication and Xian International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongyu and Xian is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tongyu Communication and Xian International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xian International and Tongyu Communication 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 Tongyu Communication are associated (or correlated) with Xian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xian International has no effect on the direction of Tongyu Communication i.e., Tongyu Communication and Xian International go up and down completely randomly.
Pair Corralation between Tongyu Communication and Xian International
Assuming the 90 days trading horizon Tongyu Communication is expected to generate 1.5 times more return on investment than Xian International. However, Tongyu Communication is 1.5 times more volatile than Xian International Medical. It trades about 0.04 of its potential returns per unit of risk. Xian International Medical is currently generating about -0.06 per unit of risk. If you would invest 887.00 in Tongyu Communication on October 18, 2024 and sell it today you would earn a total of 508.00 from holding Tongyu Communication or generate 57.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongyu Communication vs. Xian International Medical
Performance |
| Timeline |
| Tongyu Communication |
| Xian International |
Tongyu Communication and Xian International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongyu Communication and Xian International
The main advantage of trading using opposite Tongyu Communication and Xian International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongyu Communication position performs unexpectedly, Xian International 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 Xian International will offset losses from the drop in Xian International's long position.The idea behind Tongyu Communication and Xian International Medical 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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