Correlation Between ISoftStone Information and Tianshui Huatian
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By analyzing existing cross correlation between iSoftStone Information Technology and Tianshui Huatian Technology, you can compare the effects of market volatilities on ISoftStone Information and Tianshui Huatian 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 ISoftStone Information with a short position of Tianshui Huatian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISoftStone Information and Tianshui Huatian.
Diversification Opportunities for ISoftStone Information and Tianshui Huatian
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ISoftStone and Tianshui is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iSoftStone Information Technol and Tianshui Huatian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianshui Huatian Tec and ISoftStone Information 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 iSoftStone Information Technology are associated (or correlated) with Tianshui Huatian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianshui Huatian Tec has no effect on the direction of ISoftStone Information i.e., ISoftStone Information and Tianshui Huatian go up and down completely randomly.
Pair Corralation between ISoftStone Information and Tianshui Huatian
Assuming the 90 days trading horizon iSoftStone Information Technology is expected to generate 1.68 times more return on investment than Tianshui Huatian. However, ISoftStone Information is 1.68 times more volatile than Tianshui Huatian Technology. It trades about 0.05 of its potential returns per unit of risk. Tianshui Huatian Technology is currently generating about 0.05 per unit of risk. If you would invest 4,708 in iSoftStone Information Technology on September 14, 2024 and sell it today you would earn a total of 1,787 from holding iSoftStone Information Technology or generate 37.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iSoftStone Information Technol vs. Tianshui Huatian Technology
Performance |
| Timeline |
| iSoftStone Information |
| Tianshui Huatian Tec |
ISoftStone Information and Tianshui Huatian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISoftStone Information and Tianshui Huatian
The main advantage of trading using opposite ISoftStone Information and Tianshui Huatian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISoftStone Information position performs unexpectedly, Tianshui Huatian 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 Tianshui Huatian will offset losses from the drop in Tianshui Huatian's long position.The idea behind iSoftStone Information Technology and Tianshui Huatian 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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