Correlation Between Fujian Oriental and Tianjin Silvery

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

Diversification Opportunities for Fujian Oriental and Tianjin Silvery

FujianTianjinDiversified AwayFujianTianjinDiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fujian and Tianjin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Tianjin Silvery Dragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Silvery Dragon and Fujian Oriental 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 Fujian Oriental Silver are associated (or correlated) with Tianjin Silvery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Silvery Dragon has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Tianjin Silvery go up and down completely randomly.

Pair Corralation between Fujian Oriental and Tianjin Silvery

Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Tianjin Silvery. In addition to that, Fujian Oriental is 1.24 times more volatile than Tianjin Silvery Dragon. It trades about -0.12 of its total potential returns per unit of risk. Tianjin Silvery Dragon is currently generating about -0.05 per unit of volatility. If you would invest  656.00  in Tianjin Silvery Dragon on November 20, 2024 and sell it today you would lose (56.00) from holding Tianjin Silvery Dragon or give up 8.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fujian Oriental Silver  vs.  Tianjin Silvery Dragon

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10010203040
JavaScript chart by amCharts 3.21.15600753 603969
       Timeline  
Fujian Oriental Silver 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fujian Oriental Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5.566.577.588.5
Tianjin Silvery Dragon 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Silvery Dragon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Silvery may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5.566.577.5

Fujian Oriental and Tianjin Silvery Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.69-5.01-3.33-1.650.02561.533.074.66.14 0.0220.0240.0260.0280.0300.0320.034
JavaScript chart by amCharts 3.21.15600753 603969
       Returns  

Pair Trading with Fujian Oriental and Tianjin Silvery

The main advantage of trading using opposite Fujian Oriental and Tianjin Silvery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, Tianjin Silvery 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 Tianjin Silvery will offset losses from the drop in Tianjin Silvery's long position.
The idea behind Fujian Oriental Silver and Tianjin Silvery Dragon 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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