Correlation Between Tianjin Capital and Kuangda Technology

Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and Kuangda Technology 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 Tianjin Capital and Kuangda Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianjin Capital Environmental and Kuangda Technology Group, you can compare the effects of market volatilities on Tianjin Capital and Kuangda Technology 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 Tianjin Capital with a short position of Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and Kuangda Technology.

Diversification Opportunities for Tianjin Capital and Kuangda Technology

0.55

Correlation Coefficient

Tianjin Capital  Kuangda Technology

Very weak diversification

The 3 months correlation between Tianjin and Kuangda is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Kuangda Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuangda Technology and Tianjin Capital 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 Tianjin Capital Environmental are associated (or correlated) with Kuangda Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuangda Technology has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and Kuangda Technology go up and down completely randomly.

Pair Corralation between Tianjin Capital and Kuangda Technology

Assuming the 90 days trading horizon Tianjin Capital Environmental is expected to generate 0.56 times more return on investment than Kuangda Technology. However, Tianjin Capital Environmental is 1.78 times less risky than Kuangda Technology. It trades about 0.1 of its potential returns per unit of risk. Kuangda Technology Group is currently generating about 0.04 per unit of risk. If you would invest  602.00  in Tianjin Capital Environmental on September 5, 2024 and sell it today you would earn a total of  19.00  from holding Tianjin Capital Environmental or generate 3.16% return on investment over 90 days.

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

Tianjin Capital Environmental  vs.  Kuangda Technology Group

Tianjin Capital Envi

Risk-Adjusted Performance

15 of 100

Good

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

Kuangda Technology

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Tianjin Capital and Kuangda Technology

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

The idea behind Tianjin Capital Environmental and Kuangda Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.