Correlation Between TIANDE CHEMICAL and American Homes
Can any of the company-specific risk be diversified away by investing in both TIANDE CHEMICAL and American Homes 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 TIANDE CHEMICAL and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TIANDE CHEMICAL and American Homes 4, you can compare the effects of market volatilities on TIANDE CHEMICAL and American Homes 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 TIANDE CHEMICAL with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and American Homes.
Diversification Opportunities for TIANDE CHEMICAL and American Homes
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between TIANDE and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and TIANDE CHEMICAL 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 TIANDE CHEMICAL are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and American Homes go up and down completely randomly.
Pair Corralation between TIANDE CHEMICAL and American Homes
Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 1.73 times more return on investment than American Homes. However, TIANDE CHEMICAL is 1.73 times more volatile than American Homes 4. It trades about 0.09 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.05 per unit of risk. If you would invest 5.25 in TIANDE CHEMICAL on September 1, 2024 and sell it today you would earn a total of 2.00 from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TIANDE CHEMICAL vs. American Homes 4
Performance |
| Timeline |
| TIANDE CHEMICAL |
| American Homes 4 |
TIANDE CHEMICAL and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TIANDE CHEMICAL and American Homes
The main advantage of trading using opposite TIANDE CHEMICAL and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| TIANDE CHEMICAL vs. Cal Maine Foods | TIANDE CHEMICAL vs. JJ SNACK FOODS | TIANDE CHEMICAL vs. TreeHouse Foods | TIANDE CHEMICAL vs. CN MODERN DAIRY |
| American Homes vs. UDR Inc | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech | American Homes vs. Identiv |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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