Correlation Between Tianjin Realty and Great Sun

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Can any of the company-specific risk be diversified away by investing in both Tianjin Realty and Great Sun 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 Tianjin Realty and Great Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tianjin Realty Development and Great Sun Foods Co, you can compare the effects of market volatilities on Tianjin Realty and Great Sun 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 Realty with a short position of Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Realty and Great Sun.

Diversification Opportunities for Tianjin Realty and Great Sun

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Tianjin and Great is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Realty Development and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and Tianjin Realty 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 Realty Development are associated (or correlated) with Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Tianjin Realty i.e., Tianjin Realty and Great Sun go up and down completely randomly.

Pair Corralation between Tianjin Realty and Great Sun

Assuming the 90 days trading horizon Tianjin Realty Development is expected to generate 1.09 times more return on investment than Great Sun. However, Tianjin Realty is 1.09 times more volatile than Great Sun Foods Co. It trades about 0.02 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.01 per unit of risk. If you would invest  246.00  in Tianjin Realty Development on September 3, 2024 and sell it today you would lose (13.00) from holding Tianjin Realty Development or give up 5.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Tianjin Realty Development  vs.  Great Sun Foods Co

 Performance 
       Timeline  
Tianjin Realty Devel 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Realty Development are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Realty sustained solid returns over the last few months and may actually be approaching a breakup point.
Great Sun Foods 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great Sun sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Realty and Great Sun Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tianjin Realty and Great Sun

The main advantage of trading using opposite Tianjin Realty and Great Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Realty position performs unexpectedly, Great Sun 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 Great Sun will offset losses from the drop in Great Sun's long position.
The idea behind Tianjin Realty Development and Great Sun Foods Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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