Correlation Between MOUNT GIBSON and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both MOUNT GIBSON 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 MOUNT GIBSON and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOUNT GIBSON IRON and Tianjin Capital Environmental, you can compare the effects of market volatilities on MOUNT GIBSON 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 MOUNT GIBSON with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOUNT GIBSON and Tianjin Capital.
Diversification Opportunities for MOUNT GIBSON and Tianjin Capital
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOUNT and Tianjin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MOUNT GIBSON IRON 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 MOUNT GIBSON 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 MOUNT GIBSON IRON 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 MOUNT GIBSON i.e., MOUNT GIBSON and Tianjin Capital go up and down completely randomly.
Pair Corralation between MOUNT GIBSON and Tianjin Capital
Assuming the 90 days trading horizon MOUNT GIBSON IRON is expected to generate 1.92 times more return on investment than Tianjin Capital. However, MOUNT GIBSON is 1.92 times more volatile than Tianjin Capital Environmental. It trades about 0.11 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.01 per unit of risk. If you would invest 17.00 in MOUNT GIBSON IRON on November 8, 2024 and sell it today you would earn a total of 1.00 from holding MOUNT GIBSON IRON or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOUNT GIBSON IRON vs. Tianjin Capital Environmental
Performance |
| Timeline |
| MOUNT GIBSON IRON |
| Tianjin Capital Envi |
MOUNT GIBSON and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOUNT GIBSON and Tianjin Capital
The main advantage of trading using opposite MOUNT GIBSON and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOUNT GIBSON 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.| MOUNT GIBSON vs. De Grey Mining | MOUNT GIBSON vs. GALENA MINING LTD | MOUNT GIBSON vs. Hyatt Hotels | MOUNT GIBSON vs. MAGNUM MINING EXP |
| Tianjin Capital vs. Waste Management | Tianjin Capital vs. Republic Services | Tianjin Capital vs. Waste Connections | Tianjin Capital vs. Veolia Environnement SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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