Correlation Between Tieling Newcity and Metro Investment

Can any of the company-specific risk be diversified away by investing in both Tieling Newcity and Metro 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 Tieling Newcity and Metro Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tieling Newcity Investment and Metro Investment Development, you can compare the effects of market volatilities on Tieling Newcity and Metro 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 Tieling Newcity with a short position of Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tieling Newcity and Metro Investment.

Diversification Opportunities for Tieling Newcity and Metro Investment

0.57

Correlation Coefficient

Tieling Newcity  Metro Investment

Very weak diversification

The 3 months correlation between Tieling and Metro is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tieling Newcity Investment and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev and Tieling Newcity 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 Tieling Newcity Investment are associated (or correlated) with Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Tieling Newcity i.e., Tieling Newcity and Metro Investment go up and down completely randomly.

Pair Corralation between Tieling Newcity and Metro Investment

Assuming the 90 days trading horizon Tieling Newcity is expected to generate 1.25 times less return on investment than Metro Investment. But when comparing it to its historical volatility, Tieling Newcity Investment is 1.65 times less risky than Metro Investment. It trades about 0.2 of its potential returns per unit of risk. Metro Investment Development is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  344.00  in Metro Investment Development on September 2, 2024 and sell it today you would earn a total of  111.00  from holding Metro Investment Development or generate 32.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tieling Newcity Investment  vs.  Metro Investment Development

Tieling Newcity Inve

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tieling Newcity Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tieling Newcity sustained solid returns over the last few months and may actually be approaching a breakup point.

Metro Investment Dev

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Investment Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metro Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tieling Newcity and Metro Investment

The main advantage of trading using opposite Tieling Newcity and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tieling Newcity position performs unexpectedly, Metro 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 Metro Investment will offset losses from the drop in Metro Investment's long position.

The idea behind Tieling Newcity Investment and Metro Investment Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.