Correlation Between Insteel Industries and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both Insteel Industries 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 Insteel Industries and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Tianjin Capital Environmental, you can compare the effects of market volatilities on Insteel Industries 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 Insteel Industries with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Tianjin Capital.
Diversification Opportunities for Insteel Industries and Tianjin Capital
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insteel and Tianjin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries 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 Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and Tianjin Capital go up and down completely randomly.
Pair Corralation between Insteel Industries and Tianjin Capital
Assuming the 90 days horizon Insteel Industries is expected to generate 1.14 times more return on investment than Tianjin Capital. However, Insteel Industries is 1.14 times more volatile than Tianjin Capital Environmental. It trades about 0.23 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.04 per unit of risk. If you would invest 2,540 in Insteel Industries on August 29, 2024 and sell it today you would earn a total of 340.00 from holding Insteel Industries or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Tianjin Capital Environmental
Performance |
| Timeline |
| Insteel Industries |
| Tianjin Capital Envi |
Insteel Industries and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Tianjin Capital
The main advantage of trading using opposite Insteel Industries and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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.| Insteel Industries vs. FAST RETAIL ADR | Insteel Industries vs. COSTCO WHOLESALE CDR | Insteel Industries vs. MARKET VECTR RETAIL | Insteel Industries vs. Costco Wholesale Corp |
| Tianjin Capital vs. Waste Management | Tianjin Capital vs. Waste Connections | Tianjin Capital vs. GFL ENVIRONM | Tianjin Capital vs. Superior Plus Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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