Correlation Between Tongxing Environmental and Maxvision Technology
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By analyzing existing cross correlation between Tongxing Environmental Protection and Maxvision Technology Corp, you can compare the effects of market volatilities on Tongxing Environmental and Maxvision Technology 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 Tongxing Environmental with a short position of Maxvision Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Maxvision Technology.
Diversification Opportunities for Tongxing Environmental and Maxvision Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongxing and Maxvision is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Maxvision Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxvision Technology Corp and Tongxing Environmental 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 Tongxing Environmental Protection are associated (or correlated) with Maxvision Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxvision Technology Corp has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Maxvision Technology go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Maxvision Technology
Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to under-perform the Maxvision Technology. In addition to that, Tongxing Environmental is 1.03 times more volatile than Maxvision Technology Corp. It trades about -0.03 of its total potential returns per unit of risk. Maxvision Technology Corp is currently generating about -0.01 per unit of volatility. If you would invest 3,372 in Maxvision Technology Corp on October 24, 2024 and sell it today you would lose (1,144) from holding Maxvision Technology Corp or give up 33.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tongxing Environmental Protect vs. Maxvision Technology Corp
Performance |
| Timeline |
| Tongxing Environmental |
| Maxvision Technology Corp |
Tongxing Environmental and Maxvision Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongxing Environmental and Maxvision Technology
The main advantage of trading using opposite Tongxing Environmental and Maxvision Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Maxvision Technology 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 Maxvision Technology will offset losses from the drop in Maxvision Technology's long position.The idea behind Tongxing Environmental Protection and Maxvision Technology Corp 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.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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