Correlation Between THRACE PLASTICS and TIANDE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and TIANDE CHEMICAL 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 THRACE PLASTICS and TIANDE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and TIANDE CHEMICAL, you can compare the effects of market volatilities on THRACE PLASTICS and TIANDE CHEMICAL 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 THRACE PLASTICS with a short position of TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and TIANDE CHEMICAL.
Diversification Opportunities for THRACE PLASTICS and TIANDE CHEMICAL
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between THRACE and TIANDE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and TIANDE CHEMICAL go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and TIANDE CHEMICAL
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 118.12 times less return on investment than TIANDE CHEMICAL. But when comparing it to its historical volatility, THRACE PLASTICS is 2.59 times less risky than TIANDE CHEMICAL. It trades about 0.0 of its potential returns per unit of risk. TIANDE CHEMICAL is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.25 in TIANDE CHEMICAL on August 31, 2024 and sell it today you would earn a total of 2.00 from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
THRACE PLASTICS vs. TIANDE CHEMICAL
Performance |
| Timeline |
| THRACE PLASTICS |
| TIANDE CHEMICAL |
THRACE PLASTICS and TIANDE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and TIANDE CHEMICAL
The main advantage of trading using opposite THRACE PLASTICS and TIANDE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS position performs unexpectedly, TIANDE CHEMICAL 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 TIANDE CHEMICAL will offset losses from the drop in TIANDE CHEMICAL's long position.| THRACE PLASTICS vs. SBA Communications Corp | THRACE PLASTICS vs. Madison Square Garden | THRACE PLASTICS vs. MTI WIRELESS EDGE | THRACE PLASTICS vs. TRAVEL LEISURE DL 01 |
| TIANDE CHEMICAL vs. UET United Electronic | TIANDE CHEMICAL vs. United Insurance Holdings | TIANDE CHEMICAL vs. Nucletron Electronic Aktiengesellschaft | TIANDE CHEMICAL vs. Universal Insurance Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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