Correlation Between Poly Real and Tianshan Aluminum

Can any of the company-specific risk be diversified away by investing in both Poly Real and Tianshan Aluminum 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 Poly Real and Tianshan Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Poly Real Estate and Tianshan Aluminum Group, you can compare the effects of market volatilities on Poly Real and Tianshan Aluminum 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 Poly Real with a short position of Tianshan Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poly Real and Tianshan Aluminum.

Diversification Opportunities for Poly Real and Tianshan Aluminum

0.81

Correlation Coefficient

Poly Real  Tianshan Aluminum

Very poor diversification

The 3 months correlation between Poly and Tianshan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Poly Real Estate and Tianshan Aluminum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianshan Aluminum and Poly Real 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 Poly Real Estate are associated (or correlated) with Tianshan Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianshan Aluminum has no effect on the direction of Poly Real i.e., Poly Real and Tianshan Aluminum go up and down completely randomly.

Pair Corralation between Poly Real and Tianshan Aluminum

Assuming the 90 days trading horizon Poly Real Estate is expected to under-perform the Tianshan Aluminum. In addition to that, Poly Real is 1.16 times more volatile than Tianshan Aluminum Group. It trades about -0.19 of its total potential returns per unit of risk. Tianshan Aluminum Group is currently generating about 0.02 per unit of volatility. If you would invest  801.00  in Tianshan Aluminum Group on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Tianshan Aluminum Group or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Poly Real Estate  vs.  Tianshan Aluminum Group

Poly Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poly Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tianshan Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tianshan Aluminum Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianshan Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Poly Real and Tianshan Aluminum

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

The idea behind Poly Real Estate and Tianshan Aluminum Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.