Correlation Between Tianjin Capital and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital 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 Tianjin Capital and EAGLE MATERIALS 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 EAGLE MATERIALS, you can compare the effects of market volatilities on Tianjin Capital 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 Tianjin Capital with a short position of EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and EAGLE MATERIALS.
Diversification Opportunities for Tianjin Capital and EAGLE MATERIALS
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tianjin and EAGLE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS 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 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 Tianjin Capital i.e., Tianjin Capital and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between Tianjin Capital and EAGLE MATERIALS
Assuming the 90 days horizon Tianjin Capital is expected to generate 1.45 times less return on investment than EAGLE MATERIALS. In addition to that, Tianjin Capital is 1.6 times more volatile than EAGLE MATERIALS. It trades about 0.1 of its total potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.23 per unit of volatility. If you would invest 22,777 in EAGLE MATERIALS on August 28, 2024 and sell it today you would earn a total of 7,623 from holding EAGLE MATERIALS or generate 33.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. EAGLE MATERIALS
Performance |
| Timeline |
| Tianjin Capital Envi |
| EAGLE MATERIALS |
Tianjin Capital and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and EAGLE MATERIALS
The main advantage of trading using opposite Tianjin Capital and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital 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.| Tianjin Capital vs. Superior Plus Corp | Tianjin Capital vs. NMI Holdings | Tianjin Capital vs. Origin Agritech | Tianjin Capital vs. SIVERS SEMICONDUCTORS AB |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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