Correlation Between Great Wall and Ten Ren
Can any of the company-specific risk be diversified away by investing in both Great Wall and Ten Ren at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great Wall and Ten Ren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Ten Ren Tea, you can compare the effects of market volatilities on Great Wall and Ten Ren 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 Great Wall with a short position of Ten Ren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Ten Ren.
Diversification Opportunities for Great Wall and Ten Ren
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Ten is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Ten Ren Tea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ten Ren Tea and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Ten Ren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ten Ren Tea has no effect on the direction of Great Wall i.e., Great Wall and Ten Ren go up and down completely randomly.
Pair Corralation between Great Wall and Ten Ren
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.99 times more return on investment than Ten Ren. However, Great Wall Enterprise is 1.01 times less risky than Ten Ren. It trades about 0.51 of its potential returns per unit of risk. Ten Ren Tea is currently generating about 0.12 per unit of risk. If you would invest 5,270 in Great Wall Enterprise on November 28, 2024 and sell it today you would earn a total of 340.00 from holding Great Wall Enterprise or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Ten Ren Tea
Performance |
| Timeline |
| Great Wall Enterprise |
| Ten Ren Tea |
Great Wall and Ten Ren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Ten Ren
The main advantage of trading using opposite Great Wall and Ten Ren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Ten Ren 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 Ten Ren will offset losses from the drop in Ten Ren's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Ten Ren vs. Standard Foods Corp | Ten Ren vs. TTET Union Corp | Ten Ren vs. Great Wall Enterprise | Ten Ren vs. Lian Hwa Foods |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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