Correlation Between Tidehold Development and China Ecotek

Can any of the company-specific risk be diversified away by investing in both Tidehold Development and China Ecotek 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 Tidehold Development and China Ecotek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidehold Development Co and China Ecotek Corp, you can compare the effects of market volatilities on Tidehold Development and China Ecotek 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 Tidehold Development with a short position of China Ecotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidehold Development and China Ecotek.

Diversification Opportunities for Tidehold Development and China Ecotek

-0.39

Correlation Coefficient

Tidehold Development  China Ecotek

Very good diversification

The 3 months correlation between Tidehold and China is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tidehold Development Co and China Ecotek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Ecotek Corp and Tidehold Development 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 Tidehold Development Co are associated (or correlated) with China Ecotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Ecotek Corp has no effect on the direction of Tidehold Development i.e., Tidehold Development and China Ecotek go up and down completely randomly.

Pair Corralation between Tidehold Development and China Ecotek

Assuming the 90 days trading horizon Tidehold Development Co is expected to under-perform the China Ecotek. In addition to that, Tidehold Development is 1.49 times more volatile than China Ecotek Corp. It trades about -0.41 of its total potential returns per unit of risk. China Ecotek Corp is currently generating about 0.12 per unit of volatility. If you would invest  6,050  in China Ecotek Corp on September 16, 2024 and sell it today you would earn a total of  140.00  from holding China Ecotek Corp or generate 2.31% return on investment over 90 days.

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

Tidehold Development Co  vs.  China Ecotek Corp

Tidehold Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidehold Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Ecotek Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Ecotek Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, China Ecotek is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tidehold Development and China Ecotek

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

The idea behind Tidehold Development Co and China Ecotek Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.