Correlation Between Nasdaq and Tjk Machinery

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

By analyzing existing cross correlation between Nasdaq Inc and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Nasdaq and Tjk Machinery 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 Nasdaq with a short position of Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Tjk Machinery.

Diversification Opportunities for Nasdaq and Tjk Machinery

0.72

Correlation Coefficient

Nasdaq  Tjk Machinery

Poor diversification

The 3 months correlation between Nasdaq and Tjk is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Nasdaq i.e., Nasdaq and Tjk Machinery go up and down completely randomly.

Pair Corralation between Nasdaq and Tjk Machinery

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Tjk Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.68 times less risky than Tjk Machinery. The stock trades about -0.2 of its potential returns per unit of risk. The Tjk Machinery Tianjin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,394  in Tjk Machinery Tianjin on September 27, 2024 and sell it today you would earn a total of  22.00  from holding Tjk Machinery Tianjin or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Tjk Machinery Tianjin

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tjk Machinery Tianjin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tjk Machinery Tianjin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tjk Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Tjk Machinery

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

The idea behind Nasdaq Inc and Tjk Machinery Tianjin 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.