Correlation Between CHINA EDUCATION and TIANDE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and TIANDE CHEMICAL 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 CHINA EDUCATION and TIANDE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and TIANDE CHEMICAL, you can compare the effects of market volatilities on CHINA EDUCATION and TIANDE CHEMICAL 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 CHINA EDUCATION with a short position of TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and TIANDE CHEMICAL.
Diversification Opportunities for CHINA EDUCATION and TIANDE CHEMICAL
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and TIANDE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and TIANDE CHEMICAL go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and TIANDE CHEMICAL
Assuming the 90 days horizon CHINA EDUCATION is expected to generate 2.08 times less return on investment than TIANDE CHEMICAL. In addition to that, CHINA EDUCATION is 1.26 times more volatile than TIANDE CHEMICAL. It trades about 0.02 of its total potential returns per unit of risk. TIANDE CHEMICAL is currently generating about 0.06 per unit of volatility. If you would invest 3.08 in TIANDE CHEMICAL on October 11, 2024 and sell it today you would earn a total of 4.17 from holding TIANDE CHEMICAL or generate 135.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. TIANDE CHEMICAL
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| TIANDE CHEMICAL |
CHINA EDUCATION and TIANDE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and TIANDE CHEMICAL
The main advantage of trading using opposite CHINA EDUCATION and TIANDE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, TIANDE CHEMICAL 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 TIANDE CHEMICAL will offset losses from the drop in TIANDE CHEMICAL's long position.| CHINA EDUCATION vs. Taiwan Semiconductor Manufacturing | CHINA EDUCATION vs. ELMOS SEMICONDUCTOR | CHINA EDUCATION vs. RCS MediaGroup SpA | CHINA EDUCATION vs. Nexstar Media Group |
| TIANDE CHEMICAL vs. Darden Restaurants | TIANDE CHEMICAL vs. Molina Healthcare | TIANDE CHEMICAL vs. Phibro Animal Health | TIANDE CHEMICAL vs. NorAm Drilling AS |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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