Correlation Between Tienlen Steel and Song Hong
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Song Hong 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 Song Hong 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 Song Hong Aluminum, you can compare the effects of market volatilities on Tienlen Steel and Song Hong 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 Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Song Hong.
Diversification Opportunities for Tienlen Steel and Song Hong
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tienlen and Song is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Song Hong Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Aluminum 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 Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Aluminum has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Song Hong go up and down completely randomly.
Pair Corralation between Tienlen Steel and Song Hong
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to generate 0.58 times more return on investment than Song Hong. However, Tienlen Steel Corp is 1.72 times less risky than Song Hong. It trades about -0.02 of its potential returns per unit of risk. Song Hong Aluminum is currently generating about -0.07 per unit of risk. If you would invest 438,000 in Tienlen Steel Corp on November 7, 2024 and sell it today you would lose (2,000) from holding Tienlen Steel Corp or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tienlen Steel Corp vs. Song Hong Aluminum
Performance |
| Timeline |
| Tienlen Steel Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Song Hong Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tienlen Steel and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and Song Hong
The main advantage of trading using opposite Tienlen Steel and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.| Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. Binhthuan Agriculture Services | Tienlen Steel vs. Bentre Aquaproduct Import |
| Song Hong vs. HVC Investment and | Song Hong vs. Transport and Industry | Song Hong vs. Innovative Technology Development | Song Hong vs. Elcom Technology Communications |
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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