Correlation Between Tianjin Silvery and CICT Mobile

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

Diversification Opportunities for Tianjin Silvery and CICT Mobile

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Tianjin and CICT is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Silvery Dragon and CICT Mobile Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CICT Mobile Communication and Tianjin Silvery 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 Silvery Dragon are associated (or correlated) with CICT Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CICT Mobile Communication has no effect on the direction of Tianjin Silvery i.e., Tianjin Silvery and CICT Mobile go up and down completely randomly.

Pair Corralation between Tianjin Silvery and CICT Mobile

Assuming the 90 days trading horizon Tianjin Silvery is expected to generate 1.1 times less return on investment than CICT Mobile. But when comparing it to its historical volatility, Tianjin Silvery Dragon is 1.05 times less risky than CICT Mobile. It trades about 0.08 of its potential returns per unit of risk. CICT Mobile Communication is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  516.00  in CICT Mobile Communication on September 5, 2024 and sell it today you would earn a total of  132.00  from holding CICT Mobile Communication or generate 25.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Tianjin Silvery Dragon  vs.  CICT Mobile Communication

 Performance 
       Timeline  
Tianjin Silvery Dragon 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Silvery Dragon are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Silvery sustained solid returns over the last few months and may actually be approaching a breakup point.
CICT Mobile Communication 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CICT Mobile Communication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CICT Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Silvery and CICT Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tianjin Silvery and CICT Mobile

The main advantage of trading using opposite Tianjin Silvery and CICT Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Silvery position performs unexpectedly, CICT Mobile 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 CICT Mobile will offset losses from the drop in CICT Mobile's long position.
The idea behind Tianjin Silvery Dragon and CICT Mobile Communication 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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