Correlation Between TIANDE CHEMICAL and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both TIANDE CHEMICAL and EAGLE MATERIALS 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 EAGLE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TIANDE CHEMICAL and EAGLE MATERIALS, you can compare the effects of market volatilities on TIANDE CHEMICAL and EAGLE MATERIALS 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 EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and EAGLE MATERIALS.
Diversification Opportunities for TIANDE CHEMICAL and EAGLE MATERIALS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TIANDE and EAGLE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS 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 EAGLE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAGLE MATERIALS has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between TIANDE CHEMICAL and EAGLE MATERIALS
Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 1.01 times less return on investment than EAGLE MATERIALS. In addition to that, TIANDE CHEMICAL is 1.43 times more volatile than EAGLE MATERIALS. It trades about 0.09 of its total potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.13 per unit of volatility. If you would invest 21,353 in EAGLE MATERIALS on August 28, 2024 and sell it today you would earn a total of 9,047 from holding EAGLE MATERIALS or generate 42.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
TIANDE CHEMICAL vs. EAGLE MATERIALS
Performance |
| Timeline |
| TIANDE CHEMICAL |
| EAGLE MATERIALS |
TIANDE CHEMICAL and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TIANDE CHEMICAL and EAGLE MATERIALS
The main advantage of trading using opposite TIANDE CHEMICAL and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL position performs unexpectedly, EAGLE MATERIALS 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 EAGLE MATERIALS will offset losses from the drop in EAGLE MATERIALS's long position.| TIANDE CHEMICAL vs. Nordic Semiconductor ASA | TIANDE CHEMICAL vs. KAUFMAN ET BROAD | TIANDE CHEMICAL vs. MagnaChip Semiconductor Corp | TIANDE CHEMICAL vs. Texas Roadhouse |
| EAGLE MATERIALS vs. Tianjin Capital Environmental | EAGLE MATERIALS vs. SOLSTAD OFFSHORE NK | EAGLE MATERIALS vs. Lion One Metals | EAGLE MATERIALS vs. LEGACY IRON ORE |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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