Correlation Between Tienlen Steel and Investment
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and 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 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 Investment And Construction, you can compare the effects of market volatilities on Tienlen Steel and 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Investment.
Diversification Opportunities for Tienlen Steel and Investment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tienlen and Investment is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Investment And Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment And Const 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment And Const has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Investment go up and down completely randomly.
Pair Corralation between Tienlen Steel and Investment
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to generate 0.92 times more return on investment than Investment. However, Tienlen Steel Corp is 1.09 times less risky than Investment. It trades about -0.26 of its potential returns per unit of risk. Investment And Construction is currently generating about -0.38 per unit of risk. If you would invest 468,000 in Tienlen Steel Corp on October 26, 2024 and sell it today you would lose (32,000) from holding Tienlen Steel Corp or give up 6.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tienlen Steel Corp vs. Investment And Construction
Performance |
Timeline |
Tienlen Steel Corp |
Investment And Const |
Tienlen Steel and Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tienlen Steel and Investment
The main advantage of trading using opposite Tienlen Steel and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, 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 Investment will offset losses from the drop in Investment's long position.Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel vs. APG Securities Joint |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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