Correlation Between Tienlen Steel and Southern Rubber
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Southern Rubber 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 Tienlen Steel and Southern Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tienlen Steel Corp and Southern Rubber Industry, you can compare the effects of market volatilities on Tienlen Steel and Southern Rubber 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 Tienlen Steel with a short position of Southern Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Southern Rubber.
Diversification Opportunities for Tienlen Steel and Southern Rubber
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tienlen and Southern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Southern Rubber Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Rubber Industry and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Southern Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Rubber Industry has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Southern Rubber go up and down completely randomly.
Pair Corralation between Tienlen Steel and Southern Rubber
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Southern Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 1.25 times less risky than Southern Rubber. The stock trades about -0.17 of its potential returns per unit of risk. The Southern Rubber Industry is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,552,441 in Southern Rubber Industry on September 3, 2024 and sell it today you would lose (187,441) from holding Southern Rubber Industry or give up 12.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tienlen Steel Corp vs. Southern Rubber Industry
Performance |
| Timeline |
| Tienlen Steel Corp |
| Southern Rubber Industry |
Tienlen Steel and Southern Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and Southern Rubber
The main advantage of trading using opposite Tienlen Steel and Southern Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Southern Rubber 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 Southern Rubber will offset losses from the drop in Southern Rubber's long position.| Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel vs. Alphanam ME |
| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. Alphanam ME |
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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