Correlation Between TIANDE CHEMICAL and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both TIANDE CHEMICAL and SENECA FOODS-A 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 SENECA FOODS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TIANDE CHEMICAL and SENECA FOODS A, you can compare the effects of market volatilities on TIANDE CHEMICAL and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and SENECA FOODS-A.
Diversification Opportunities for TIANDE CHEMICAL and SENECA FOODS-A
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TIANDE and SENECA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between TIANDE CHEMICAL and SENECA FOODS-A
Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 1.19 times more return on investment than SENECA FOODS-A. However, TIANDE CHEMICAL is 1.19 times more volatile than SENECA FOODS A. It trades about 0.06 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.02 per unit of risk. If you would invest 3.08 in TIANDE CHEMICAL on August 29, 2024 and sell it today you would earn a total of 4.17 from holding TIANDE CHEMICAL or generate 135.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TIANDE CHEMICAL vs. SENECA FOODS A
Performance |
| Timeline |
| TIANDE CHEMICAL |
| SENECA FOODS A |
TIANDE CHEMICAL and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TIANDE CHEMICAL and SENECA FOODS-A
The main advantage of trading using opposite TIANDE CHEMICAL and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A'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 |
| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft | SENECA FOODS-A vs. Microsoft |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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