Correlation Between Tianjin Capital and Aqua America
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and Aqua America 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 Tianjin Capital and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tianjin Capital Environmental and Aqua America, you can compare the effects of market volatilities on Tianjin Capital and Aqua America 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 Tianjin Capital with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and Aqua America.
Diversification Opportunities for Tianjin Capital and Aqua America
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tianjin and Aqua is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and Tianjin Capital 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 Tianjin Capital Environmental are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Aqua America go up and down completely randomly.
Pair Corralation between Tianjin Capital and Aqua America
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 1.26 times more return on investment than Aqua America. However, Tianjin Capital is 1.26 times more volatile than Aqua America. It trades about -0.1 of its potential returns per unit of risk. Aqua America is currently generating about -0.24 per unit of risk. If you would invest 39.00 in Tianjin Capital Environmental on October 25, 2024 and sell it today you would lose (1.00) from holding Tianjin Capital Environmental or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. Aqua America
Performance |
| Timeline |
| Tianjin Capital Envi |
| Aqua America |
Tianjin Capital and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and Aqua America
The main advantage of trading using opposite Tianjin Capital and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| Tianjin Capital vs. MAGNUM MINING EXP | Tianjin Capital vs. Peijia Medical Limited | Tianjin Capital vs. ARDAGH METAL PACDL 0001 | Tianjin Capital vs. Forsys Metals Corp |
| Aqua America vs. Strategic Education | Aqua America vs. EEDUCATION ALBERT AB | Aqua America vs. DeVry Education Group | Aqua America vs. STRAYER EDUCATION |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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