Correlation Between Tianjin Capital and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and STEEL DYNAMICS 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 STEEL DYNAMICS 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 STEEL DYNAMICS, you can compare the effects of market volatilities on Tianjin Capital and STEEL DYNAMICS 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 STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and STEEL DYNAMICS.
Diversification Opportunities for Tianjin Capital and STEEL DYNAMICS
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tianjin and STEEL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS 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 STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Tianjin Capital and STEEL DYNAMICS
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 1.42 times more return on investment than STEEL DYNAMICS. However, Tianjin Capital is 1.42 times more volatile than STEEL DYNAMICS. It trades about 0.11 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.11 per unit of risk. If you would invest 31.00 in Tianjin Capital Environmental on October 18, 2024 and sell it today you would earn a total of 8.00 from holding Tianjin Capital Environmental or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. STEEL DYNAMICS
Performance |
| Timeline |
| Tianjin Capital Envi |
| STEEL DYNAMICS |
Tianjin Capital and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and STEEL DYNAMICS
The main advantage of trading using opposite Tianjin Capital and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| Tianjin Capital vs. Stag Industrial | Tianjin Capital vs. CSSC Offshore Marine | Tianjin Capital vs. CyberArk Software | Tianjin Capital vs. PT Wintermar Offshore |
| STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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