Correlation Between Tianjin Capital and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM, you can compare the effects of market volatilities on Tianjin Capital and GFL ENVIRONM 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 GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and GFL ENVIRONM.
Diversification Opportunities for Tianjin Capital and GFL ENVIRONM
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tianjin and GFL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM 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 GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between Tianjin Capital and GFL ENVIRONM
Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 1.42 times more return on investment than GFL ENVIRONM. However, Tianjin Capital is 1.42 times more volatile than GFL ENVIRONM. It trades about 0.09 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about -0.28 per unit of risk. If you would invest 38.00 in Tianjin Capital Environmental on October 1, 2024 and sell it today you would earn a total of 1.00 from holding Tianjin Capital Environmental or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tianjin Capital Environmental vs. GFL ENVIRONM
Performance |
Timeline |
Tianjin Capital Envi |
GFL ENVIRONM |
Tianjin Capital and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tianjin Capital and GFL ENVIRONM
The main advantage of trading using opposite Tianjin Capital and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.Tianjin Capital vs. Veolia Environnement SA | ||
Tianjin Capital vs. Veolia Environnement SA | ||
Tianjin Capital vs. Veolia Environnement SA | ||
Tianjin Capital vs. GFL ENVIRONM |
GFL ENVIRONM vs. Veolia Environnement SA | ||
GFL ENVIRONM vs. Veolia Environnement SA | ||
GFL ENVIRONM vs. Veolia Environnement SA | ||
GFL ENVIRONM vs. Umicore SA |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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