Correlation Between Tongyu Communication and Tjk Machinery
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By analyzing existing cross correlation between Tongyu Communication and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Tongyu Communication and Tjk Machinery 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 Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongyu Communication and Tjk Machinery.
Diversification Opportunities for Tongyu Communication and Tjk Machinery
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongyu and Tjk is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tongyu Communication and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin 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 Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Tongyu Communication i.e., Tongyu Communication and Tjk Machinery go up and down completely randomly.
Pair Corralation between Tongyu Communication and Tjk Machinery
Assuming the 90 days trading horizon Tongyu Communication is expected to under-perform the Tjk Machinery. In addition to that, Tongyu Communication is 1.12 times more volatile than Tjk Machinery Tianjin. It trades about -0.13 of its total potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about -0.02 per unit of volatility. If you would invest 1,357 in Tjk Machinery Tianjin on October 31, 2024 and sell it today you would lose (26.00) from holding Tjk Machinery Tianjin or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongyu Communication vs. Tjk Machinery Tianjin
Performance |
| Timeline |
| Tongyu Communication |
| Tjk Machinery Tianjin |
Tongyu Communication and Tjk Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongyu Communication and Tjk Machinery
The main advantage of trading using opposite Tongyu Communication and Tjk Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongyu Communication position performs unexpectedly, Tjk Machinery 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 Tjk Machinery will offset losses from the drop in Tjk Machinery's long position.The idea behind Tongyu Communication and Tjk Machinery Tianjin 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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