Correlation Between Royalty Management and China Tontine

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

By analyzing existing cross correlation between Royalty Management Holding and China Tontine Wines, you can compare the effects of market volatilities on Royalty Management and China Tontine 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 Royalty Management with a short position of China Tontine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and China Tontine.

Diversification Opportunities for Royalty Management and China Tontine

0.0

Correlation Coefficient

Royalty Management  China Tontine

Pay attention - limited upside

The 3 months correlation between Royalty and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and China Tontine Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tontine Wines and Royalty Management 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 Royalty Management Holding are associated (or correlated) with China Tontine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tontine Wines has no effect on the direction of Royalty Management i.e., Royalty Management and China Tontine go up and down completely randomly.

Pair Corralation between Royalty Management and China Tontine

If you would invest  98.00  in Royalty Management Holding on September 30, 2024 and sell it today you would lose (4.00) from holding Royalty Management Holding or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.13%
Values	Daily Returns

Royalty Management Holding  vs.  China Tontine Wines

Royalty Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royalty Management Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Royalty Management is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

China Tontine Wines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Tontine Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Tontine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Royalty Management and China Tontine

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

The idea behind Royalty Management Holding and China Tontine Wines 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.