Correlation Between Tongxing Environmental and Iat Automobile
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By analyzing existing cross correlation between Tongxing Environmental Protection and Iat Automobile Technology, you can compare the effects of market volatilities on Tongxing Environmental and Iat Automobile 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 Iat Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Iat Automobile.
Diversification Opportunities for Tongxing Environmental and Iat Automobile
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongxing and Iat is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Iat Automobile Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iat Automobile Technology 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 Iat Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iat Automobile Technology has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Iat Automobile go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Iat Automobile
Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to generate 0.97 times more return on investment than Iat Automobile. However, Tongxing Environmental Protection is 1.03 times less risky than Iat Automobile. It trades about -0.22 of its potential returns per unit of risk. Iat Automobile Technology is currently generating about -0.24 per unit of risk. If you would invest 1,706 in Tongxing Environmental Protection on October 11, 2024 and sell it today you would lose (261.00) from holding Tongxing Environmental Protection or give up 15.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tongxing Environmental Protect vs. Iat Automobile Technology
Performance |
| Timeline |
| Tongxing Environmental |
| Iat Automobile Technology |
Tongxing Environmental and Iat Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongxing Environmental and Iat Automobile
The main advantage of trading using opposite Tongxing Environmental and Iat Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Iat Automobile 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 Iat Automobile will offset losses from the drop in Iat Automobile's long position.The idea behind Tongxing Environmental Protection and Iat Automobile Technology 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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