Correlation Between TIANDE CHEMICAL and Aqua America

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

By analyzing existing cross correlation between TIANDE CHEMICAL and Aqua America, you can compare the effects of market volatilities on TIANDE CHEMICAL and Aqua America 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 TIANDE CHEMICAL with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and Aqua America.

Diversification Opportunities for TIANDE CHEMICAL and Aqua America

0.77

Correlation Coefficient

TIANDE CHEMICAL  Aqua America

Poor diversification

The 3 months correlation between TIANDE and Aqua is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and TIANDE CHEMICAL 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 TIANDE CHEMICAL are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and Aqua America go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and Aqua America

Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 3.19 times more return on investment than Aqua America. However, TIANDE CHEMICAL is 3.19 times more volatile than Aqua America. It trades about 0.12 of its potential returns per unit of risk. Aqua America is currently generating about 0.05 per unit of risk. If you would invest  5.25  in TIANDE CHEMICAL on September 23, 2024 and sell it today you would earn a total of  2.00  from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

TIANDE CHEMICAL  vs.  Aqua America

TIANDE CHEMICAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TIANDE CHEMICAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TIANDE CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aqua America

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua America are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aqua America is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TIANDE CHEMICAL and Aqua America

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

The idea behind TIANDE CHEMICAL and Aqua America 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.