Correlation Between China Ecotek and TTET Union
Can any of the company-specific risk be diversified away by investing in both China Ecotek and TTET Union 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 China Ecotek and TTET Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Ecotek Corp and TTET Union Corp, you can compare the effects of market volatilities on China Ecotek and TTET Union 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 China Ecotek with a short position of TTET Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Ecotek and TTET Union.
Diversification Opportunities for China Ecotek and TTET Union
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and TTET is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Ecotek Corp and TTET Union Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTET Union Corp and China Ecotek 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 China Ecotek Corp are associated (or correlated) with TTET Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTET Union Corp has no effect on the direction of China Ecotek i.e., China Ecotek and TTET Union go up and down completely randomly.
Pair Corralation between China Ecotek and TTET Union
Assuming the 90 days trading horizon China Ecotek Corp is expected to generate 1.49 times more return on investment than TTET Union. However, China Ecotek is 1.49 times more volatile than TTET Union Corp. It trades about 0.11 of its potential returns per unit of risk. TTET Union Corp is currently generating about -0.16 per unit of risk. If you would invest 6,160 in China Ecotek Corp on September 12, 2024 and sell it today you would earn a total of 140.00 from holding China Ecotek Corp or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Ecotek Corp vs. TTET Union Corp
Performance |
| Timeline |
| China Ecotek Corp |
| TTET Union Corp |
China Ecotek and TTET Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Ecotek and TTET Union
The main advantage of trading using opposite China Ecotek and TTET Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Ecotek position performs unexpectedly, TTET Union 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 TTET Union will offset losses from the drop in TTET Union's long position.| China Ecotek vs. CHC Resources Corp | China Ecotek vs. China Steel Chemical | China Ecotek vs. TTET Union Corp | China Ecotek vs. Standard Foods Corp |
| TTET Union vs. Standard Foods Corp | TTET Union vs. Uni President Enterprises Corp | TTET Union vs. Great Wall Enterprise | TTET Union vs. Ruentex Development Co |
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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