Correlation Between Tianjin Hi and Anhui Fuhuang
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By analyzing existing cross correlation between Tianjin Hi Tech Development and Anhui Fuhuang Steel, you can compare the effects of market volatilities on Tianjin Hi and Anhui Fuhuang 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 Tianjin Hi with a short position of Anhui Fuhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Hi and Anhui Fuhuang.
Diversification Opportunities for Tianjin Hi and Anhui Fuhuang
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tianjin and Anhui is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Hi Tech Development and Anhui Fuhuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Fuhuang Steel and Tianjin Hi 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 Tianjin Hi Tech Development are associated (or correlated) with Anhui Fuhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Fuhuang Steel has no effect on the direction of Tianjin Hi i.e., Tianjin Hi and Anhui Fuhuang go up and down completely randomly.
Pair Corralation between Tianjin Hi and Anhui Fuhuang
Assuming the 90 days trading horizon Tianjin Hi Tech Development is expected to generate 0.55 times more return on investment than Anhui Fuhuang. However, Tianjin Hi Tech Development is 1.82 times less risky than Anhui Fuhuang. It trades about 0.35 of its potential returns per unit of risk. Anhui Fuhuang Steel is currently generating about 0.04 per unit of risk. If you would invest 261.00 in Tianjin Hi Tech Development on November 8, 2024 and sell it today you would earn a total of 32.00 from holding Tianjin Hi Tech Development or generate 12.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Tianjin Hi Tech Development vs. Anhui Fuhuang Steel
Performance |
| Timeline |
| Tianjin Hi Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Anhui Fuhuang Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Tianjin Hi and Anhui Fuhuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Hi and Anhui Fuhuang
The main advantage of trading using opposite Tianjin Hi and Anhui Fuhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Hi position performs unexpectedly, Anhui Fuhuang 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 Anhui Fuhuang will offset losses from the drop in Anhui Fuhuang's long position.The idea behind Tianjin Hi Tech Development and Anhui Fuhuang Steel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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