Correlation Between Tienlen Steel and Everland Investment
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Everland Investment 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 Everland Investment 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 Everland Investment JSC, you can compare the effects of market volatilities on Tienlen Steel and Everland Investment 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 Everland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Everland Investment.
Diversification Opportunities for Tienlen Steel and Everland Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tienlen and Everland is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Everland Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everland Investment JSC 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 Everland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everland Investment JSC has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Everland Investment go up and down completely randomly.
Pair Corralation between Tienlen Steel and Everland Investment
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Everland Investment. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 1.75 times less risky than Everland Investment. The stock trades about -0.46 of its potential returns per unit of risk. The Everland Investment JSC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 671,000 in Everland Investment JSC on August 31, 2024 and sell it today you would lose (22,000) from holding Everland Investment JSC or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tienlen Steel Corp vs. Everland Investment JSC
Performance |
| Timeline |
| Tienlen Steel Corp |
| Everland Investment JSC |
Tienlen Steel and Everland Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and Everland Investment
The main advantage of trading using opposite Tienlen Steel and Everland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Everland Investment 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 Everland Investment will offset losses from the drop in Everland Investment'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 |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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