Correlation Between TianJin 712 and Guocheng Mining
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By analyzing existing cross correlation between TianJin 712 Communication and Guocheng Mining Co, you can compare the effects of market volatilities on TianJin 712 and Guocheng Mining 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 712 with a short position of Guocheng Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of TianJin 712 and Guocheng Mining.
Diversification Opportunities for TianJin 712 and Guocheng Mining
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TianJin and Guocheng is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TianJin 712 Communication and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and TianJin 712 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 712 Communication are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of TianJin 712 i.e., TianJin 712 and Guocheng Mining go up and down completely randomly.
Pair Corralation between TianJin 712 and Guocheng Mining
Assuming the 90 days trading horizon TianJin 712 Communication is expected to under-perform the Guocheng Mining. But the stock apears to be less risky and, when comparing its historical volatility, TianJin 712 Communication is 1.06 times less risky than Guocheng Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Guocheng Mining Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,189 in Guocheng Mining Co on November 8, 2024 and sell it today you would earn a total of 49.00 from holding Guocheng Mining Co or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TianJin 712 Communication vs. Guocheng Mining Co
Performance |
| Timeline |
| TianJin 712 Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guocheng Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
TianJin 712 and Guocheng Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TianJin 712 and Guocheng Mining
The main advantage of trading using opposite TianJin 712 and Guocheng Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TianJin 712 position performs unexpectedly, Guocheng Mining 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 Guocheng Mining will offset losses from the drop in Guocheng Mining's long position.The idea behind TianJin 712 Communication and Guocheng Mining 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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