Correlation Between Tianjin Capital and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and Salzgitter 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 Salzgitter 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 Salzgitter AG, you can compare the effects of market volatilities on Tianjin Capital and Salzgitter 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 Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and Salzgitter.
Diversification Opportunities for Tianjin Capital and Salzgitter
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tianjin and Salzgitter is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Salzgitter AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG 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 Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Salzgitter go up and down completely randomly.
Pair Corralation between Tianjin Capital and Salzgitter
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.86 times more return on investment than Salzgitter. However, Tianjin Capital Environmental is 1.17 times less risky than Salzgitter. It trades about 0.09 of its potential returns per unit of risk. Salzgitter AG is currently generating about -0.04 per unit of risk. If you would invest 37.00 in Tianjin Capital Environmental on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Tianjin Capital Environmental or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. Salzgitter AG
Performance |
| Timeline |
| Tianjin Capital Envi |
| Salzgitter AG |
Tianjin Capital and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and Salzgitter
The main advantage of trading using opposite Tianjin Capital and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| Tianjin Capital vs. Veolia Environnement SA | Tianjin Capital vs. GFL ENVIRONM | Tianjin Capital vs. Superior Plus Corp | Tianjin Capital vs. SIVERS SEMICONDUCTORS AB |
| Salzgitter vs. KRAKATAU STEEL B | Salzgitter vs. SALESFORCE INC CDR | Salzgitter vs. QURATE RETAIL INC | Salzgitter 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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