Correlation Between Tianjin Capital and Perma-Fix Environmental
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and Perma-Fix Environmental 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 Perma-Fix Environmental 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 Perma Fix Environmental Services, you can compare the effects of market volatilities on Tianjin Capital and Perma-Fix Environmental 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 Perma-Fix Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and Perma-Fix Environmental.
Diversification Opportunities for Tianjin Capital and Perma-Fix Environmental
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tianjin and Perma-Fix is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Perma-Fix Environmental go up and down completely randomly.
Pair Corralation between Tianjin Capital and Perma-Fix Environmental
Assuming the 90 days horizon Tianjin Capital is expected to generate 1.32 times less return on investment than Perma-Fix Environmental. But when comparing it to its historical volatility, Tianjin Capital Environmental is 2.46 times less risky than Perma-Fix Environmental. It trades about 0.07 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Perma Fix Environmental Services on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Perma Fix Environmental Services or generate 1.48% 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. Perma Fix Environmental Servic
Performance |
| Timeline |
| Tianjin Capital Envi |
| Perma Fix Environmental |
Tianjin Capital and Perma-Fix Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and Perma-Fix Environmental
The main advantage of trading using opposite Tianjin Capital and Perma-Fix Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, Perma-Fix Environmental 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 Perma-Fix Environmental will offset losses from the drop in Perma-Fix Environmental's long position.| Tianjin Capital vs. Veolia Environnement SA | Tianjin Capital vs. GFL ENVIRONM | Tianjin Capital vs. Superior Plus Corp | Tianjin Capital vs. NMI Holdings |
| Perma-Fix Environmental vs. Veolia Environnement SA | Perma-Fix Environmental vs. GFL ENVIRONM | Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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