Correlation Between Tianjin Capital and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on Tianjin Capital and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and HEMISPHERE EGY.
Diversification Opportunities for Tianjin Capital and HEMISPHERE EGY
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tianjin and HEMISPHERE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between Tianjin Capital and HEMISPHERE EGY
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.87 times more return on investment than HEMISPHERE EGY. However, Tianjin Capital Environmental is 1.15 times less risky than HEMISPHERE EGY. It trades about 0.01 of its potential returns per unit of risk. HEMISPHERE EGY is currently generating about -0.01 per unit of risk. If you would invest 39.00 in Tianjin Capital Environmental on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Tianjin Capital Environmental or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. HEMISPHERE EGY
Performance |
| Timeline |
| Tianjin Capital Envi |
| HEMISPHERE EGY |
Tianjin Capital and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and HEMISPHERE EGY
The main advantage of trading using opposite Tianjin Capital and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| Tianjin Capital vs. Datadog | Tianjin Capital vs. ALIOR BANK | Tianjin Capital vs. REVO INSURANCE SPA | Tianjin Capital vs. Datang International Power |
| HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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