Correlation Between Tongxing Environmental and Hefei Metalforming
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By analyzing existing cross correlation between Tongxing Environmental Protection and Hefei Metalforming Mach, you can compare the effects of market volatilities on Tongxing Environmental and Hefei Metalforming 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 Hefei Metalforming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Hefei Metalforming.
Diversification Opportunities for Tongxing Environmental and Hefei Metalforming
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tongxing and Hefei is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Hefei Metalforming Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hefei Metalforming Mach 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 Hefei Metalforming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hefei Metalforming Mach has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Hefei Metalforming go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Hefei Metalforming
Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to under-perform the Hefei Metalforming. But the stock apears to be less risky and, when comparing its historical volatility, Tongxing Environmental Protection is 1.12 times less risky than Hefei Metalforming. The stock trades about -0.01 of its potential returns per unit of risk. The Hefei Metalforming Mach is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 655.00 in Hefei Metalforming Mach on August 26, 2024 and sell it today you would earn a total of 165.00 from holding Hefei Metalforming Mach or generate 25.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongxing Environmental Protect vs. Hefei Metalforming Mach
Performance |
| Timeline |
| Tongxing Environmental |
| Hefei Metalforming Mach |
Tongxing Environmental and Hefei Metalforming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongxing Environmental and Hefei Metalforming
The main advantage of trading using opposite Tongxing Environmental and Hefei Metalforming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Hefei Metalforming 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 Hefei Metalforming will offset losses from the drop in Hefei Metalforming's long position.| Tongxing Environmental vs. China Petroleum Chemical | Tongxing Environmental vs. PetroChina Co Ltd | Tongxing Environmental vs. China State Construction | Tongxing Environmental vs. China Railway Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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