Correlation Between De Grey and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Tianjin Capital Environmental, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Tianjin Capital.
Diversification Opportunities for De Grey and Tianjin Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DGD and Tianjin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and Tianjin Capital go up and down completely randomly.
Pair Corralation between De Grey and Tianjin Capital
Assuming the 90 days trading horizon De Grey Mining is expected to generate 3.36 times more return on investment than Tianjin Capital. However, De Grey is 3.36 times more volatile than Tianjin Capital Environmental. It trades about 0.13 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.05 per unit of risk. If you would invest 92.00 in De Grey Mining on October 30, 2024 and sell it today you would earn a total of 22.00 from holding De Grey Mining or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Tianjin Capital Environmental
Performance |
| Timeline |
| De Grey Mining |
| Tianjin Capital Envi |
De Grey and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Tianjin Capital
The main advantage of trading using opposite De Grey and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.The idea behind De Grey Mining and Tianjin Capital Environmental 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.| Tianjin Capital vs. The Trade Desk | Tianjin Capital vs. CanSino Biologics | Tianjin Capital vs. TRADELINK ELECTRON | Tianjin Capital vs. Carsales |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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