Correlation Between Asbury Automotive and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Tianjin Capital 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 Asbury Automotive and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Tianjin Capital Environmental, you can compare the effects of market volatilities on Asbury Automotive and Tianjin Capital 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 Asbury Automotive with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Tianjin Capital.
Diversification Opportunities for Asbury Automotive and Tianjin Capital
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Tianjin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi and Asbury Automotive 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 Asbury Automotive Group are associated (or correlated) with Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Tianjin Capital go up and down completely randomly.
Pair Corralation between Asbury Automotive and Tianjin Capital
Considering the 90-day investment horizon Asbury Automotive is expected to generate 9.68 times less return on investment than Tianjin Capital. But when comparing it to its historical volatility, Asbury Automotive Group is 4.31 times less risky than Tianjin Capital. It trades about 0.05 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Tianjin Capital Environmental on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Tianjin Capital Environmental or generate 153.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Tianjin Capital Environmental
Performance |
| Timeline |
| Asbury Automotive |
| Tianjin Capital Envi |
Asbury Automotive and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Tianjin Capital
The main advantage of trading using opposite Asbury Automotive and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Tianjin Capital 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 Capital will offset losses from the drop in Tianjin Capital's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Tianjin Capital vs. JJill Inc | Tianjin Capital vs. Duluth Holdings | Tianjin Capital vs. Under Armour C | Tianjin Capital vs. Nike Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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