Correlation Between Maple Leaf and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both Maple Leaf 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 Maple Leaf and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Leaf Foods and Tianjin Capital Environmental, you can compare the effects of market volatilities on Maple Leaf 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 Maple Leaf with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and Tianjin Capital.
Diversification Opportunities for Maple Leaf and Tianjin Capital
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maple and Tianjin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods 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 Maple Leaf 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 Maple Leaf Foods 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 Maple Leaf i.e., Maple Leaf and Tianjin Capital go up and down completely randomly.
Pair Corralation between Maple Leaf and Tianjin Capital
Assuming the 90 days trading horizon Maple Leaf Foods is expected to generate 1.41 times more return on investment than Tianjin Capital. However, Maple Leaf is 1.41 times more volatile than Tianjin Capital Environmental. It trades about 0.16 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 1,360 in Maple Leaf Foods on November 7, 2024 and sell it today you would earn a total of 90.00 from holding Maple Leaf Foods or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. Tianjin Capital Environmental
Performance |
| Timeline |
| Maple Leaf Foods |
| Tianjin Capital Envi |
Maple Leaf and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and Tianjin Capital
The main advantage of trading using opposite Maple Leaf and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf 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.| Maple Leaf vs. China Communications Services | Maple Leaf vs. Zoom Video Communications | Maple Leaf vs. Spirent Communications plc | Maple Leaf vs. Austevoll Seafood ASA |
| Tianjin Capital vs. National Health Investors | Tianjin Capital vs. CEOTRONICS | Tianjin Capital vs. CeoTronics AG | Tianjin Capital vs. Brockhaus Capital Management |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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