Correlation Between Tianjin Capital and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Tianjin Capital and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and SMA Solar.
Diversification Opportunities for Tianjin Capital and SMA Solar
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tianjin and SMA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and SMA Solar go up and down completely randomly.
Pair Corralation between Tianjin Capital and SMA Solar
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.68 times more return on investment than SMA Solar. However, Tianjin Capital Environmental is 1.48 times less risky than SMA Solar. It trades about 0.08 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.06 per unit of risk. If you would invest 32.00 in Tianjin Capital Environmental on November 2, 2024 and sell it today you would earn a total of 7.00 from holding Tianjin Capital Environmental or generate 21.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Tianjin Capital Environmental vs. SMA Solar Technology
Performance |
Timeline |
Tianjin Capital Envi |
SMA Solar Technology |
Tianjin Capital and SMA Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tianjin Capital and SMA Solar
The main advantage of trading using opposite Tianjin Capital and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.Tianjin Capital vs. Cal Maine Foods | Tianjin Capital vs. United Natural Foods | Tianjin Capital vs. Prosiebensat 1 Media | Tianjin Capital vs. PROSIEBENSAT1 MEDIADR4 |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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