Correlation Between President Chain and Tingyi Holding
Can any of the company-specific risk be diversified away by investing in both President Chain and Tingyi Holding 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 President Chain and Tingyi Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Chain Store and Tingyi Holding Corp, you can compare the effects of market volatilities on President Chain and Tingyi Holding 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 President Chain with a short position of Tingyi Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Tingyi Holding.
Diversification Opportunities for President Chain and Tingyi Holding
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between President and Tingyi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Tingyi Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tingyi Holding Corp and President Chain 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 President Chain Store are associated (or correlated) with Tingyi Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tingyi Holding Corp has no effect on the direction of President Chain i.e., President Chain and Tingyi Holding go up and down completely randomly.
Pair Corralation between President Chain and Tingyi Holding
Assuming the 90 days trading horizon President Chain Store is expected to under-perform the Tingyi Holding. But the stock apears to be less risky and, when comparing its historical volatility, President Chain Store is 5.41 times less risky than Tingyi Holding. The stock trades about -0.16 of its potential returns per unit of risk. The Tingyi Holding Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,085 in Tingyi Holding Corp on November 4, 2024 and sell it today you would earn a total of 325.00 from holding Tingyi Holding Corp or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Chain Store vs. Tingyi Holding Corp
Performance |
| Timeline |
| President Chain Store |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tingyi Holding Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
President Chain and Tingyi Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Chain and Tingyi Holding
The main advantage of trading using opposite President Chain and Tingyi Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Chain position performs unexpectedly, Tingyi Holding 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 Tingyi Holding will offset losses from the drop in Tingyi Holding's long position.The idea behind President Chain Store and Tingyi Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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