Correlation Between SFL and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both SFL 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 SFL and Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Tianjin Capital Environmental, you can compare the effects of market volatilities on SFL 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 SFL with a short position of Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Tianjin Capital.
Diversification Opportunities for SFL and Tianjin Capital
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SFL and Tianjin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. 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 SFL 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 SFL Corporation 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 SFL i.e., SFL and Tianjin Capital go up and down completely randomly.
Pair Corralation between SFL and Tianjin Capital
Considering the 90-day investment horizon SFL is expected to generate 6.01 times less return on investment than Tianjin Capital. But when comparing it to its historical volatility, SFL Corporation is 3.85 times less risky than Tianjin Capital. It trades about 0.05 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8.09 in Tianjin Capital Environmental on August 28, 2024 and sell it today you would earn a total of 29.91 from holding Tianjin Capital Environmental or generate 369.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFL Corp. vs. Tianjin Capital Environmental
Performance |
| Timeline |
| SFL Corporation |
| Tianjin Capital Envi |
SFL and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Tianjin Capital
The main advantage of trading using opposite SFL and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL 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 SFL Corporation 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. Copa Holdings SA | Tianjin Capital vs. United Airlines Holdings | Tianjin Capital vs. Delta Air Lines | Tianjin Capital vs. SkyWest |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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